Morning Commentary: Primary quiet; secondary improves; Bahrain, Oman, Lebanon slightly tighter

By Rebecca Melvin

New York, May 22 – The emerging market primary was quiet on Tuesday, but the general tone in the secondary improved somewhat as the U.S. dollar eased from five- to six-month highs, according to market sources.

Meanwhile, oil prices moved higher amid heightened concerns regarding sanctions and supply constraints following the re-election of Venezuela president Nicolas Maduro to a six-year term. And U.S. Treasuries were lower, pushing the yield on the 10-year benchmark note up to 3.078%.

Israel Chemicals Ltd. continued to market its planned U.S. dollar-denominated offering of 20- to 30-year notes, with the expectation that pricing would occur on Wednesday depending on market conditions, according to a syndicate source.

Back in the secondary market, the sovereign bonds of Bahrain, Oman and Lebanon, which have been beaten down this month, “snapped back” with the retreating dollar, and they managed to end 10 basis points to 20 bps tighter on the day, while in some cases Lebanese bonds moved tighter by 30 bps to 40 bps, a London-based trader said.

Perpetual paper and some high beta sovereigns continued to struggle, but “overall it was a broadly positive day,” the trader said.

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