EM debt spreads wider, hold within recent range; Ukraine edges up; LatAm sovereigns slip

By Rebecca Melvin

New York, Oct. 26 – Spreads on emerging markets debt widened on Friday but remained within their recent trading range despite this past week’s tumult in equity markets.

The spread on the J.P. Morgan U.S. dollar emerging markets sovereign bond index was wider by 9 basis points at 394 bps on Friday, compared to 379 bps at the beginning of the week. That’s still below the most recent peak of 407 bps touched on Sept. 4, Michael Roche of Seaport Global told Prospect News.

Ukraine’s newly priced five-year and 10-year senior notes edged up in trade after the sovereign priced $750 million of the 9% 2024 notes and $1.25 billion of the 9¾% 2028 notes on Thursday. The bonds were quoted at 100.3 in the early going after pricing with a new issue premium of 15 bps to 20 bps, according to a London-based market source.

Despite the volatility this past week, the emerging markets debt primary remained active. In addition to Ukraine, Oman priced a large $1.5 billion seven-year sukuk; United Arab Emirates’ utility National Central Cooling Co. PJSC, or Tabreed, priced $500 million of seven-year sukuk certificates; Korea Housing Finance Corp. priced €500 million of five-year covered bonds; and Tunisia priced €500 million of five-year notes.

Joining the forward calendar on Friday was Kazakhstan, which plans to issue euro-denominated senior unsecured notes.

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