Emerging markets strong at month-end; Venezuela, PDVSA better bid, but clearing problems arise

By Rebecca Melvin

New York, Aug. 31 – Emerging markets spreads were mostly better again on Thursday on the back of month-end activity and ahead of what was expected to be a lull in activity on Friday, according to market sources.

“Super strong market,” a London-based trader said, noting that most issues were performing well ahead of the quiet day expected to precede the long holiday weekend in the United States. Markets are expected to reopen on Tuesday with a nearly full slate of personnel.

Bahrain was narrowly mixed on Thursday after the curve for that sovereign tightened by 7 to 10 basis points on Wednesday. Bahrain’s 6 1/8% notes due 2022 were indicated to have edged up on Thursday for a closing price of 104¼ bid, 104¾ offered, compared to 104.12 bid 104.87 offered on Wednesday. The bond’s spread, which tightened strongly on Wednesday, closed a couple of points narrower on Thursday.

Other Middle Eastern sovereigns also improved on Wednesday, including Oman, Kuwait and Qatar.

Wednesday and Thursday’s bounce back from a widening on Tuesday was mostly driven by interest rates and combined with month-end activity, which saw the majority of credits performing nicely, the London-based trader said.

Venezuela and Petroleos de Venezuela SA bonds were better bid in the early going on Thursday, but clearing problems were beginning to arise, according to market sources.

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