EM volumes lighten; Lat-Am bonds move wider; perpetuals stay popular; Mexico on deck

By Christine Van Dusen

Atlanta, Jan. 12 – Volumes were thinner than the previous week for emerging markets bonds as investors dealt with declining oil prices, the move in U.S. Treasuries and Russia’s downgrade.

“Volumes, overall, are lighter then prior days,” a New York-based trader said. “Eyes are still on the oil move lower, U.S. Treasury rally, the weaker equity markets and increased volatility. Hopes remain this will all settle down, we can drag money into the asset class chasing some spread and yield and that the poor liquidity does not discourage new money from the asset class.”

From Russia, bonds weren’t suffering much on Monday on the back of a new downgrade to BBB- from Fitch Ratings, a London-based analyst said.

In deal-related news, investors were keeping an eye new deals ahead for Mexico, China Construction Bank (Asia) Corp. Ltd. and Korea Export-Import Bank (Kexim).

Bonds from Latin America ended Monday a bit wider, a New York-based trader said.

Looking to the Middle East, bonds were not as active as they were during the previous week, but there were “pockets of interest,” a London-based trader said.

Perpetual bonds were in one of the pockets, led by Dubai Islamic Bank PJSC’s notes, which closed at 99.37 bid, 99.87 offered on Friday and opened at par bid on Monday before hitting a high of 101 and closing at 100¼ bid, 100½ offered.

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