South Africa spreads ‘very firm overall’ after top leader election; Chile narrowly mixed

By Rebecca Melvin

New York, Dec. 18 – Spreads on South Africa debt improved on Monday as results of the African National Congress leadership election made Deputy President Cyril Ramaphosa the new party head, replacing current President Jacob Zuma.

Spreads were “very firm overall,” a London-based trader said of South African debt.

The vote count proceeded despite accusations of vote rigging and other irregularities to which the ANC responded by disqualifying almost 500 delegates.

The race for top party leader between Ramaphosa, viewed as positive for South African assets, and ex-minister Nkosazana Dlamini-Zuma was a close one.

Spreads on Eskom Holdings SOC Ltd., South Africa’s state-run power utility, were notably tighter.

These bonds maturing in 2021, 2023 and 2025 had dropped to their lowest levels in a year in the middle of November. The Eskom 5¾% bonds due 2021 were seen 99¾ bid, 100¾ offered early Monday with spread tighter by 10 basis points on the month.

South Africa’s sovereign 5 7/8% bonds due 2025 were seen 108¼ bid, 109¼ offered, with a spread tighter by almost 15 bps on the day and almost 17 bps on the month.

Elsewhere, Chile’s sovereign curve was narrowly mixed after a victory by conservative billionaire and former president Sebastian Pinera in the Latin American country’s presidential run-off election.

Pinera is returning to the presidency after a four-year hiatus as he held the office from 2010 to 2014. Pinera takes the reigns from socialist President Michelle Bachelet. She had backed left wing candidate Alejandro Guillier in Sunday’s election. But popularity of Bachelet’s progressive agenda had suffered in 2015 when a corruption scandal involving her daughter-in-law came to light.

Chile’s 3 5/8% notes due 2042 ended higher on Monday by 0.024 point to 100.06 on the Luxembourg Stock Exchange. Chile’s 2¼% notes due 2022 edged lower by less than 1.8 point to 98.738, and Chile’s 3 1/8% notes due 2025 were up less than 1/8 point to 102.475.

Venezuela’s sovereign debt was little changed to slightly lower on the day. Venezuela’s 13 5/8% bonds due 2031 ended the day at 42.51, which was down from 42.833 on the Luxembourg stock exchange. The 52-week high for this bond is 92.4. and its 52-week low is 31.

A market source said that Venezuela debt was “pretty much unchanged from Friday to slightly lower.”

© 2015 Prospect News.
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