EM resilient as Fed raises interest rate; Dutch election, oil eyed; Equate, Kuwait trade

By Christine Van Dusen

Atlanta, March 15 – Emerging markets investors closely watched the Federal Reserve on Wednesday and were unsurprised by the decision to increase the benchmark interest rate as a result of moderate and steady economic growth.

“With markets already incorporating a Fed rate hike ... it will be worth it to look beyond, in terms of any changes to the forward guidance and comments from [Federal Reserve chairman Janet] Yellen’s press conference,” a London-based analyst said.

In the remarks, the Federal Reserve said it would now focus on stabilizing inflation.

Also impacting the picture on Wednesday was the Dutch election, which pitted the establishment against anti-immigrant nationalists and was expected to be seen as an indication of how other upcoming European elections were likely to go.

“The Dutch elections are undeniably a key test of sentiment, even if alternative right-wing candidate Geert Wilders is unlikely to succeed current prime minister Mark Rutte,” the analyst said.

Oil was another factor on Wednesday. Saudi Arabia announced it has increased production to 10 million barrels a day from 9.7 million. But the total remains lower than January’s 10.5 million, the analyst said.

Meanwhile, recent notes from Kuwait’s Equate Petrochemical Co. KSCC – $500 million 3.944% Islamic bonds due 2024 that came to the market at par to yield 175 bps over mid-swaps – received some attention. They traded Wednesday at 100.87 bid, 101.62 offer, another trader said.

And a new issue from Kuwait remained active on Wednesday, a trader said.

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