EM debt steady to higher; RAKbank announces offering; Pemex adds

By Rebecca Melvin

New York, March 25 – Emerging markets debt was little changed early Monday but notched gains later in the session as U.S. Treasury yields continued to trend lower in response to the Federal Reserve’s news last week that it is shifting away from a rate-hiking policy.

The yield curve for two- and five-year notes inverted further on Monday and is now approaching levels at which the Fed has cut rates in the past.

In the primary market, National Bank of Ras Al Khaimah (RAKbank) has selected banks and scheduled fixed-income investor meetings regarding a planned benchmark offering of dollar-denominated five-year notes, according to a syndicate source on Monday.

Citigroup, Bank ABC, Emirates NBD Capital, First Abu Dhabi Bank, ICBC and Standard Chartered were mandated to organize a roadshow for the Regulation S notes beginning on Thursday.

The issuer is a commercial bank based in Dubai, United Arab Emirates.

Elsewhere, Turkey’s credit default swaps jumped after the country’s financial regulators opened probes into JP Morgan and other banks accusing them of providing misinformation. The news hit Turkey’s currency and its five-year CD jumped by 27 basis points to 426 bps. According to a report citing IHS Markit data, that level has not been reached since September after a hard currency selloff in August.

The bonds for Petroleos Mexicanos SAB de CV jumped on Monday as investors bought bonds on the heels of reports that the government plans to use a budget surplus fund to help the oil company refinance debt due this year.

The company has $107 billion in debt outstanding, with payments on $5.3 billion of debt due by the end of May.

Pricing has been gradually improving since the middle of February when investors expressed their disappointment with a financing package, and Fitch Ratings said the Mexican government’s actions were unlikely to undo its last credit rating action or be enough to prevent continued deterioration of the company’s credit quality.

Pemex’s 6½% notes due 2027 were trading up to 101.5 bid, 101.875 at the end of Monday, and a late print was seen in the notes at 103.4, that compares to pricing at around 100.25 early Monday and below par around the middle of March.

The Pemex 6¾% notes due 2047 were trading last around 93.30 to 93.50, after bouncing around in trade during the session.

Meanwhile, Brazil’s Petroleo Brasileiro SA (Petrobras), which priced $3 billion of notes this month, saw its 5¾% global notes due 2029 improve, ending the day at about 99.5 bid, 99.625 offered, which was off from its highs at close to par, but still firmer than they had been last week. The Petrobras 6.9% notes due 2049 closed at close to its highs for the day at 99.5. Brazil’s Economic Ministry released better-than-expected jobs data of 173,139 payroll jobs added in February.

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