Emerging markets weaker; spreads widen, but pricing mostly steady; newer Iraq bond improves

By Rebecca Melvin

New York, Aug. 17 – Emerging markets were generally weaker on Thursday with wider spreads as U.S. Treasuries rallied for a second straight day.

“We are wider on the day marginally and lower in some credits as a function of Treasuries being stronger,” a New York-based market source said.

In Latin America, spreads were wider almost across the board, including Argentina, Colombia, Peru and Venezuela, but pricing was little changed, the source said.

Venezuela credit was “fading.” PDVSA’s 8½% notes due 2017 were seen trading at 90.5 and lower. That was down from earlier in the week, but still higher compared to 85 bid, 86 offered at midweek a week ago.

In the Middle East, Iraq was tighter on Thursday, with its 6¾% notes due 2023, of which $1 billion priced on Aug. 2, indicated at 100.62 bid, 101.12 offered, with a spread that was tighter by about 15 basis points.

The emerging primary market was very quiet. There was a Regulation S deal priced by China developer CK Infrastructure Holdings Ltd. for $500 million of perpetual capital securities.

But the only other issue mentioned when discussing the primary market was Jamaica’s tap of its 6¾% notes due 2028 and 7 7/8% notes due 2045, which debuted on Wednesday.

Elsewhere, the Central & Eastern European, Middle East and Africa regions were quiet in the primary, a London-based market source said.

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