Pampa Energia, Raizen Energia, Equate Petrochemical ready deals; Turkey underperforms

By Christine Van Dusen

Atlanta, Jan. 6 – Argentina’s Pampa Energia SA, Brazil-based Raizen Energia SA and Kuwait’s Equate Petrochemical Co. KSCC readied new issues on a Friday that saw most emerging markets names – other than Turkey – perform well in trading.

“We are off to a solid start into 2017, with EM assets having seen strong demand throughout the first week,” a London-based analyst said. “In rates, we saw somewhat of a reversal in the reflation trade put on after the Trump win, with markets also turning a blind eye on the more hawkish FOMC minutes.”

Indeed, 10-year Treasuries were seen trading almost 30 basis points tighter, versus the highs seen on Dec. 15, he said.

“With investors returning to EM credit in a search for yield, we saw further spread compression,” he said. “With spreads still fairly tight, we are seeing high-yielding Asian, Sub-Saharan African and Latin American assets as the biggest gainers this week.”

There was a strong bid almost across all emerging markets geographies and sectors, but it remains to be seen whether the bid can continue, he said.

“We think that the positive mood could swap over into next week,” he said.

But rates and sentiment are likely to remain volatile, he said.

“With Trump’s inauguration nearing, the focus will inevitably shift back to his policies,” he said.

In trading, bonds from Turkey have underperformed so far this year, following terrorist attacks and political conflicts.

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