Selling hits Middle East sovereigns, Qatar banks as tensions rise; Venezuela, PDVSA weaker

By Rebecca Melvin

New York, June 5 – The Middle East was a focus of emerging markets credit on Monday after news that Saudi Arabia, Bahrain, Egypt and the United Arab Emirates have cut diplomatic ties with Qatar, accusing Qatar of backing terrorism and meddling in their internal affairs.

Among sovereign debts, there was “a clear flattening of Qatar” on the day, but Oman and Dubai “definitely held in well and, in fact, saw net adding,” a London-based trader said.

Qatari banks sustained the biggest hit, including Qatar Insurance Co. and Ezdan Holding Group, the trader said.

Among Qatar’s sovereign issues, the 2.099% bonds due 2018 were indicated at par bid, 100.08 offered, and the Qatar 3¼% bonds due 2026 were at 99.12 bid, 99.62 offered, according to a market source.

In Latin America, Venezuela and PDVSA (Petroleos de Venezuela SA) bonds were weaker. Whether the widening was due to the Middle East tensions or the South American country’s internal struggles was unclear.

Venezuela and PDVSA bonds were in by about ½ point, and spreads widened by about 25 basis points, sources said.

With the result of the State of Mexico gubernatorial elections falling in line with the Institutional Revolutionary Party (PRI) ruling party, investors felt confident on Monday to lift that country’s sovereign debt by about 7 or 8 bps, a New York-based trader said.

© 2015 Prospect News.
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