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EM calm with Eid holiday; Venezuela sovereign, corporate bonds remain under pressure
By Paul A. Harris
Portland, Ore., Sept. 12 – Emerging markets were generally calm on Monday with some markets on holiday, a market source said.
The Eid al-Adha holidays were underway in Muslim countries.
Investors continue to eye a possible interest rate hike with the Federal Reserve Bank’s Federal Open Market Committee meets next week.
Also the Bank of England will make an interest rate decision this week, although no change in rates is anticipated.
Adding to positive sentiment in the Middle East was a Syria truce deal brokered by Russia and the United States.
The iShares JPMorgan USD Emerg Markets Bond (EMB) exchange-traded was flat on the day, ending at $116.26 per share, down 0.02% or two cents.
Venezuela still under pressure
A slight improvement in crude oil prices at the New York open failed to lift Venezuelan sovereign and corporate paper, a market source said.
Venezuela sovereign bonds were down generically 1% to 2% across the curve.
Venezuela’s benchmark 9¼% notes due 2027 were down ¾ of a point at 48¾ bid, 49¼ offered, down a point.
At the long end of the curve the 7% bonds due 2038, at 40½ bid, 41¼ offered, were yielding 17.81%, the source said.
Quasi-sovereign paper of Petroleos de Venezuela, SA (PDVSA) was down as much as 2½%.
The PDVSA 6% notes due 2024 were 37 bid, 37¾ offered, down ¾ point.
Venezuela paper came under increased pressure on news reports that China, which has a strategic alliance with Venezuela dating back to the days of socialist president Hugo Chavez, is rethinking that alliance amid security and financial concerns, the source remarked.
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