Peru improves; Ukraine eyed; Brazil remains tumultuous, but CDS tighten; EM trading slow

By Christine Van Dusen

Atlanta, March 28 – Bonds from Peru opened a touch stronger and Mexico’s Cemex SAB de CV saw a little bit of activity on an otherwise slow Easter Monday morning for emerging markets assets.

“We expect slow trading at the beginning of the week, with focus being on Friday United States employment figures,” according to a report from Schildershoven Finance BV. “The market is hovering near local highs and is waiting for a catalyst for the next move.”

Peru’s notes opened “with a slightly better tone than where we left off last week,” a New York-based trader said. “Extremely quiet so far, as you can assume. Only a few trades in Latin America.”

Meanwhile, tumult continued in Brazil, where the likelihood of an impeachment for President Dilma Rousseff seemed to be increasing.

“It could become a positive trigger for the market,” according to a report from Schildershoven Finance BV.

By the end of the day, Latin American credit was higher and tighter, though volumes remained low, a New York-based trader said.

Brazil’s five-year credit default swaps spreads closed at 382 basis points from 397 bps, while Mexico’s moved to 166 bps from 171 bps.

“Cash prices finish mixed, with some curves higher, whereas others are actually lower, despite spread tightening in the CDS world,” he said. “Latin American high yield finishes higher on the day, with both Venezuela and Argentina firmer.”

Venezuela’s 2027s finished the day at 39.90 from 39.75, while PDVSA’s 2017s closed at 52 from 51.625.

Argentina’s Bonar 2024s closed at 107.80 from 107.40, he said.

“Volumes and flows were very quiet today, with some selling in Mexico’s long end, and buying in Brazil,” he said.

Ukraine politics affect bonds

Looking to Ukraine, bonds are expected to react negatively to the news that Ukrainian Parliament Speaker Volodymyr Hroisman will head the new government, Schildershoven said.

Backed by President Petro Poroshenko, Hroisman has been tasked with leading the country “out of a political tumult that’s halted the flow of international financial aid,” the report said.

But Hroisman is “struggling to assemble a parliamentary majority, as parties bicker before a vote on his candidacy next week,” Schildershoven said. “Even lawmakers from Poroshenko’s own party said they haven’t yet decided whether to support Hroisman.”

Yunnan draws orders

The new issue of notes China’s Yunnan Provincial Investment Holdings Group (YIG) – $300 million 3 3/8% notes due 2019 that priced at 99.748 to yield 3.464%, or Treasuries plus 240 bps – drew a final order book of $3.3 billion from 109 accounts, a market source said.

Bank of China International, China Minsheng International, UBS, BOC International, Quam Securities, Shanghai Pudong Development Bank, CCB International, ANZ and AMTD were the bookrunners for the Regulation S deal.

About 94% of the orders came from Asia and 6% from others, with 41% from asset managers and fund managers, 32% from banks, 17% from sovereign wealth funds, 7% from corporates and 3% from private banks.

The issuer is a Kunming-based supplier of steel, iron ore, coal, sand and gravel that also works in transportation, construction, technology and other sectors.

© 2015 Prospect News.
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