EM sovereigns upgraded, downgraded amid thin volumes; no new issuance before holiday break

By Christine Van Dusen

Atlanta, Dec. 23 - Several emerging markets issuers - including Hungary and Vietnam - saw ratings changes on a quiet, pre-holiday Thursday with thinner trading and no new issuance.

"Trading volumes have decreased significantly as we head into the holiday," a California-based buyside source said.

Said a Brazil-based market source: "There's no market at all today. Nothing traded at all, really."

Kazakhstan rating raised

Treasury yields rose a touch on mixed economic news from the United States. Durable goods orders declined 1.3% in November while jobless claims dipped during the week.

This came against the backdrop of Hungary's downgrade by Fitch Ratings due to concerns about the sovereign's attempts to reduce the budget gap by implementing special taxes and putting private pension funds under state control. The rating could easily be downgraded again, this time to junk, a source said.

Meanwhile, Kazakhstan's rating was raised by Standard & Poor's to BBB, given the sovereign's resiliency and expected 6% growth at year-end, and Vietnam's was downgraded to BB- from BB.

Market reaction muted

Also making headlines on Thursday was Ivory Coast, which has had its loans frozen from the World Bank and the Central Bank of the West African States in an attempt to force defeated president Laurent Gbagbo to step down. The United Nations has estimated that about 173 people have been killed in the last week due to political violence.

In other news, Greece is planning to restructure its privately held debt after 2013 alongside other debt-saddled countries like Ireland, a source said.

"In Brazil, the central bank inflation report gave a strong signal that they are ready to hike interest rates as soon as January if inflation expectations continue to rise," the California-based market source said.

But none of these countries saw movement in their bonds as a result.

"There's no market reaction," the source said.

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