Emerging market debt drifts as year-end approaches; Russian paper unfazed by mystery buyer

By Reshmi Basu

New York, Dec. 21 - Emerging market debt drifted Tuesday in light trading, as the pre-holiday season closed down both the primary and secondary market.

As the year wraps up, most investors have put the finishing touches to their portfolios and very few want to take on additional risk, said a market source.

"There is very little happening out there," said a trader. "Little trades here and there."

In late trading, movers for the day included Brazil, Colombia, Ecuador and Venezuela. The Brazil C bond was up 0.06 to 102.06 bid while the bond due 2040 added a quarter of a point to 118.80 bid. The Colombia bond due 2009 increased 0.10 to 114.10 bid. The Ecuador bond due 2030 gained 0.20 to 86¼ bid and Venezuela's bond due 2027 added 0.35 to 106.15 bid.

"We didn't see a lot of volume today [Tuesday] in emerging markets," said a Latin America debt strategist for Refco EM.

"Couple of days ago, I heard hedge funds were taking positions in local markets."

Meanwhile, Latin American currencies, such as the Brazilian real, continue to soar against the soft U.S dollar.

"In terms of emerging markets, the most important event in the past few weeks has been the appreciation of local currencies," said the strategist.

"The Chilean peso appreciated yesterday [Monday] towards its highest level in 11 months. Also, the Colombian peso had quite a ride. Today [Tuesday] it touched a 31-month high," he said.

In order to slow down the appreciation of the Colombian peso against the U.S dollar, the central bank said it would no longer accept overnight cash from commercial banks. After the announcement, the peso fell by 1.5%.

Russia edging up

During the holiday slowdown, even headlines have had little impact on sovereign prices, said the market source.

For instance, the question over just who is the mystery winner of the auction for Yukos' lucrative asset Yuganskneftegas persists, but Russian paper appears to be unfazed, said the source.

In late trading Tuesday, the Russia bond due 2030 added 5/8 of a point to 103 bid while the bond due 2010 gained 1/8 of a point to 110 3/8.

On Tuesday, president Vladimir Putin hinted that the winners of the auction were active in the energy sector.

"As far as I've been informed the auction conformed completely with current Russian law and I expect that all other activities in this area in the future will also take place according to law," Putin said in Germany.

He also added that China's state-controlled China National Petroleum Corp. may "take part in working on this asset as well."

On Sunday, unknown Baikal Finance Group made a successful bid for oil firm Yuganskneftegas, stepping up with a $9.4 billion for the subsidiary of dismantled Yukos.

Most believed Baikal was a front for state-owned Gazprom, who was barred from playing in the auction by a U.S court.

Also on Tuesday, Russian papers reported that Baikal Finance had ties to number four Russian oil firm Surgutneftegaz.

© 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.