Turkey softens, EM remains strong overall; Russia’s PhosAgro, Brazil’s Hidrovias on tap

By Rebecca Melvin

New York, Jan. 16 – Turkish sovereign and bank debt was weaker on Tuesday but the overall emerging markets continued to perform very well, a London-based market source said.

The market was continuing strong action from Monday’s session even though U.S. financial markets were closed on Monday in observance of Martin Luther King Jr. Day.

A little bit of softness was seen in Tuesday’s market around Turkey credits after Turkish President Tayyip Erdogan said that Turkey planned an imminent intervention in the Kurdish-controlled enclave of Afrin in northern Syria, London-based market sources said.

“EM generally is still in a good spot but Turkey was lagging due to Erdogan’s comments yesterday saying that the Turkish army would be ready to start military operations in Afrin and Manbij at any time,” one market source said.

Erdogan made the statements as part of his denouncement of the Trump administration’s plans to support Kurdish-led fighters in norther Syria with a border force and as many as 30,000 troops, announced on Sunday.

Otherwise, market players watched oil prices drop on Tuesday amid a spate of profit taking following three-year highs notched in priced to near $70 per barrel.

U.S. West Texas Intermediate crude ended at $63.73 a barrel, down 57 cents, or nearly 1%.

In addition, the market was awaiting more new issuance, which has been slower to gather steam in most regions other than Latin America.

“People are just waiting for the calendar,” one source said. On Wednesday a deal from Moscow-based chemical holding company PhosAgro is expected following investor meetings that wrapped up on Tuesday. PhosAgro has proposed an issue of dollar-denominated loan participation notes.

But nothing further was heard on deals expected this quarter from Qatar, Abu Dhabi and Saudi Arabia.

“They have been rumored but nothing yet,” a market source said.

In Latin America, Hidrovias International Finance Sarl, a subsidiary of the Brazilian inland waterway services company Hidrovias do Brasil SA, was expected to price on Wednesday dollar-denominated seven-year senior notes. The planned deal size of the BB Fitch-rated notes was still not known.

Also on the calendar is a deal from Mexico’s Unifin Financiera, SAB de CV Sofom ENR, but pricing of that deal was not expected until next week following investor meetings expected to wrap up on Jan. 23.

Turkey’s notes weaker

Turkey’s 2030 sovereign issue was down about 0.3% to 157.24 on Tuesday, which is still at about the middle of its 52-week range and well off lows notched in November on worries over increased political tensions with the United States.

The U.S. support announced on Sunday for a border force to defend territory held by U.S.-backed, Kurdish-led fighters in northern Syria has ratcheted up tensions. Erdogan threatened on Monday to strangle a planned 30,000 of U.S. troops for the area, calling it a terror army.

The Syrian government of President Bashar al-Assad responded on Monday by vowing to crush the new force and drive the U.S. troops from the country. Erdogan denounced the plan, saying, “A country we call an ally is insisting on forming a terror army on our borders.”

The U.S.-led coalition said it was working with its militia allies, the mainly Kurdish-led Syrian Democratic Forces to set up the new force to patrol the Turkish and Iraqi borders as well as within Syria along the Euphrates River which separates SDF territory from that held by the government. Turkey views the Syrian Kurdish forces supported by the United States as allies of the PKK, a banned Kurdish group waging an insurgency in southern Turkey.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.