Credito Real notes rise in early trade; emerging markets debt pauses after two-day rally

By Rebecca Melvin

New York, Feb. 1 – Mexico’s Credito Real SAB de CV Sofom ER’s newly priced 9½% notes traded up in the early going on Friday after the consumer finance provider priced $400 million of the seven-year notes at par, a New York-based market source said.

The Credito Real notes were seen changing hands at 101 3/8.

“It was a very generously priced bond in which the issuer left something on the table for investors,” the market source said.

Back in secondary action, emerging markets debt paused after a two-day rally that began after the U.S. Federal Reserve held rates steady as expected on Wednesday and said it will be patient regarding any further rate tightening.

Spreads stand significantly tighter than they were a month ago, with the JPMorgan emerging markets bond index for sovereign credits showing spread has narrowed to 377.9 basis points as of the market close on Thursday, down from 445 bps at the end of December.

Most of the week’s spread tightening occurred on Thursday, when sub-Saharan Africa bonds came in by 20 bps, and Latin America came in by 8 bps. “The Ukraine was also in, and Argentina came roaring back,” a market source said.

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