Morning Commentary: Emerging markets quiet as holiday nears; new Vrio 10-year slips in trade

By Rebecca Melvin

New York, March 29 – Emerging markets were quietly hobbling into the end of the first quarter on Thursday ahead of a long holiday weekend for Easter. Despite unstable market conditions this past week, some deals pressed through to pricing on Wednesday, but not all of them priced well or traded up in the aftermarket.

There is a recommended early close for bond markets on Thursday at 2 p.m. ET and markets will remain closed on Good Friday.

Vrio Corp., AT&T Inc.’s DirecTV Latin American subsidiary, priced two deals for $1 billion of notes, but the larger $650 million tranche of 10-year notes priced at the high end of talk and then traded down.

The new 6 7/8% notes due 2028, yielding 7%, were seen down ½ point in the early going on Thursday, according to a New York-based market source.

It makes investors less willing to go into a deal if it trades down, so it’s not good for the market, the source said.

In the Latin America region, two of four deals on the calendar ended up pricing this week. InRetail Real Estate Corp. priced $350 million of 5¾% notes due 2028 at par on Tuesday. But with the Easter holiday weekend just hours away there was 0% chance that the other deals would price, a syndicate source away from the deals said.

Also new to the market on Thursday was the Arab Gulf nation of Bahrain’s $1 billion 7½-year sukuk, or Islamic bond. Those bonds were not heard in trade. The deal was larger than initially expected, but partially compensating for a planned 12- and/or 30-year conventional bonds that never priced.

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