EM continues to struggle; Turkey underperforms; Argentina near lows as IMF talks begin

By Rebecca Melvin

New York, May 8 – Emerging markets debt continued to struggle across the board on Tuesday with notable selling of Africa, Turkey and Argentina bonds, among others, market sources said.

The strong dollar was still the main driver of troubles for the emerging markets while President Donald Trump’s announcement that the United States is pulling out of the Iran nuclear deal, as expected, contributed to a general risk-off tone in financial markets.

Meanwhile, market watchers turned to news that Argentina is seeking a new line of credit from the International Monetary Fund. Talks have started between Argentina and the IMF, but it is not known how long the talks will take or what form a facility might take, an emerging markets strategist said.

Argentina’s $2.75 billion 7 1/8% notes due 2117, which have performed in line with the sovereign’s overall yield curve, were a little lower on the day but had recovered some ground since hitting a low point on Friday.

The Argentine Province of Cordoba’s 7 1/8% notes due 2027 were trading around 93.25, which was down about 0.4% from 93.62 on Monday.

Meanwhile, Turkey’s bonds were also underperforming, with the sovereign called 5 basis points to 10 bps wider on the day, and Turkey corporate issues called 15 bps to 20 bps wider, a London-based trader said.

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