Emerging markets debt weaker as equity selloff goes on; EM-focused Millicom gains in gray

By Rebecca Melvin

New York, Oct. 11 – Emerging markets debt was weak on Thursday as U.S. markets initially attempted to stabilize, but later succumbed to another downdraft, pushing indexes down another 1.3% to 2%. Milder-than-expected inflation data did little to soothe concerns that the U.S. Fed will continue its trajectory of rate tightening.

“Everything is struggling. Spreads are wider today,” a London-based trader, focused on the Middle East and Africa region, said.

A second market source said EM debt “feels heavy,” although flows and pricing action were not excessive.

Despite the mixed picture for rates, there was a new deal that priced and another one joining the calendar for the Latin America region. Even if the Republic of Peru, which wrapped up roadshow meetings on Wednesday, did not make Thursday its choice to price.

EM-focused Millicom International Cellular SA priced $500 million of eight year notes at par to yield 6 5/8%, a market source said. Those notes were higher by more than a point in the gray market, where the market was quoted 101 bid, 101.125 ask, the source said.

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