EM reacts to Fed minutes, Greece; Ukraine bonds dip; Kazakhstan CDS widen, currency falls

By Christine Van Dusen

Atlanta, Aug. 20 – Asian credits were volatile while other risky assets continued correcting on Thursday morning after the Federal Reserve’s recent minutes – which showed that officials are closer to increasing the benchmark rate – and on the news that Greece’s prime minister resigned.

Greek bonds declined in response, a trader said.

Also on Thursday, market-watchers were keeping an eye on Kazakhstan, which saw its currency fell 23% after allowing its currency exchange rate to float overnight. This was seen as a response to China’s recent devaluation of its currency.

Kazakhstan’s sovereign notes fell and its five-year credit default swaps spreads moved up by about 12 basis points, a trader said.

Buyers emerged for China-based Cnooc Ltd.’s 2025 bonds, then sellers emerged after the London open.

“Korea was 1 bp to 3 bps wider,” a trader said. “India held in firm for most of the day.”

Bonds from Malaysia widened between 3 bps and 8 bps, he said, while Malaysia’s Petroliam Nasional Bhd. (Petronas)] saw sellers.

High-grade corporates from China were “muted,” another trader said.

From Latin America, low-beta spreads were wider on the day as uncertainty in global markets kept risk appetite low, a New York-based trader said.

Looking to Ukraine, sovereign bonds have dipped amid some “anxiety in the market,” said Fyodor Bagnenko, a fixed-income trader with Dragon Capital.

© 2015 Prospect News.
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