Solid day for EM; Russia, Ukraine underperform; Lat-Am prices rise; Bahrain picks banks

By Christine Van Dusen

Atlanta, Aug. 15 – Emerging markets assets remained mostly solid on Monday, with bids for Latin American bonds tied to Treasury weakness, as investors eyed the tension between Russia and Ukraine.

Risky assets on Monday were “on a solid footing, as the search for yield and an otherwise benevolent environment overshadow geopolitical and political risks,” a London-based analyst said.

But Russia and Ukraine saw their bonds underperform as tensions continued, with Russia accusing Ukraine of engaging in terror activity after the deaths of two Russian servicemen.

From Latin America, volumes were low on Monday and the market continued to trade well, a New York-based trader said.

Brazil’s five-year credit default swaps spreads closed at 253 basis points from 258 bps, while Mexico’s ended at 134 bps from 136 bps.

“Cash prices remain well-bid despite Treasury weakness, but bids did start to get hit later in the day as Treasuries hit intraday lows,” he said. “Lat-Am high-yield finishes higher on the day, with both Venezuela and Argentina higher.”

“Flows very light to kick off the week, with only scrappy two-way throughout the session,” he said.

In deal-related news, China Aircraft Leasing Group Holdings Ltd. set talk in the 5¼% area for a dollar-denominated issue of notes due Aug. 22, 2021, a market source said.

Bahrain has mandated Bank ABC, BNP Paribas, Credit Suisse, JPMorgan and Standard Chartered Bank as bookrunners for an upcoming issue of eurobonds, a market source said.

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