Chinese corporates issue notes; Iraq, Ukraine news dampens investor sentiment; EM bonds widen

By Christine Van Dusen

Atlanta, June 16 – China’s Bank of Communications and China’s Far East Horizon Ltd. sold notes on Monday as emerging markets assets widened on Monday amid worries about the crisis in Iraq and the gas dispute between Russia and Ukraine.

“Choppy day,” a trader said.

Russia’s gas company, Gazprom, says Ukraine has not paid its bills and will soon only receive the gas that has already been paid for, a London-based analyst said.

In response, bonds from Gazprom traded down on Monday morning, she said.

Turkey’s bonds also suffered on Monday, with the crisis in Iraq hurting sentiment.

“Overall, [emerging markets] feels weaker this morning, with Russian banks 15 basis points wider on average,” she said. “But selling has, overall, been fairly modest, with select buying by real money.”

In other trading, the new issue of 3½% notes due in 2024 that Morocco priced last week at mid-swaps plus 215 bps moved slightly wider on Monday.

“Fairly defensive tone throughout the day, with the situation in Iraq and Ukraine being quoted as the reason, but I also think the recent supply is just weighing on the market a little,” a London-based trader said. “These factors, combined with the Street just being defensive, saw spreads, for the most part, wider.”

In deal-related news on Monday, Russia’s OAO Sberbank was looking at printing notes while three issuers – Slovenia’s Petrol dd Ljubljana, Kenya and United Arab Emirates-based National Bank of Ras Al Khaimah (RAKbank) – gave guidance.

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