Risk aversion remains; Turkey in focus; Middle East bonds mixed; Seven Energy revives deal

By Christine Van Dusen

Atlanta, Oct. 2 – Singapore’s Tuan Sing Holdings Ltd. sold notes as emerging markets assets opened slightly wider on a Thursday that saw investors maintaining a risk-off posture ahead of jobs numbers from the United States and remarks from the European Central Bank.

“Investor focus will turn to the ECB today, particularly [ECB President Mario Draghi]’s conference and any changes in rhetoric, as well as non-farm payrolls tomorrow,” a London-based analyst said. “Fitch’s review of Turkey’s rating tomorrow evening adds further uncertainty.”

Sovereign bonds aren’t expected to suffer much if the ratings change occurs; the notes have already widened about 50 basis points on the month, a trader said.

At the end of the session, Middle Eastern bonds were “a real mixed bag,” a London-based trader said.

“Overall, spreads are struggling,” he said. “This traditionally does happen with a U.S. Treasury rally, as we simply cannot keep pace with their move.”

The London trader also pointed to the drop in oil prices as a source of investor concern.

This could hurt the upcoming issue of notes expected from oil-focused Kazakhstan, a market source said.

Thursday also saw bonds from Abu Dhabi and Qatar widen, a trader said.

In other news, Nigeria-focused Seven Energy International Ltd. has revived plans for a dollar-denominated offering of notes, setting talk in the 10½% area, a market source said.

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