Morning Commentary: Oman preps deal; flows muted; oil prices, Trump eyed; Turkey underperforms

By Christine Van Dusen

Atlanta, Jan. 3 – Oman planned a new issue of dollar bonds on a Tuesday that saw mostly muted flows for emerging markets assets as issuers and investors returned from the winter holidays. Now, they’re looking ahead to the release of U.S. payrolls data and the Federal Open Market Committee’s minutes from December.

“On the political front, Trump has all eyes on him as we’re nearing his ... inauguration on Jan. 20,” a London-based analyst said. “With that in mind, we are likely to see further volatility on the U.S. dollar and rates.”

Oil was in focus on Tuesday, with prices under pressure after Kuwait announced that it had lowered production to comply with the deal among producers in the region.

Turkey, for one, underperformed and saw some selling of long-dated dollar paper after a terrorist attack in Istanbul and ahead of the Jan. 27 Fitch Ratings review, a trader said.

“I can’t see any serious re-positioning ahead of that, so it’s United States Treasuries and headline risk to deal with,” he said.

Banks from Turkey are likely to be hit the most by any ratings change, the analyst said.

Looking to the Middle East, the tone was firm on Tuesday, the trader said.

“Locals are putting cash to work on top of the U.S. Treasury move,” he said. ”December really was a choppy month, and unfortunately I think that was just a taster for what 2017 has in store.”

For its upcoming deal, Oman is looking to print up to $2 billion in bonds, a market source said.

The bonds are likely to be multi-tranche and could carry tenors of five and 10 years. They may be sold as a sukuk.

The proceeds will be used to address the sultanate’s budget deficit.

Oman is currently seeking bookrunners for the transaction.

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