Morning Commentary: EM spreads mixed, trading quiets as market watches rates move

By Rebecca Melvin

New York, Oct. 20 – Emerging market spreads were narrowly mixed and trading quieted into the market close in London as market players eye a push higher in U.S. Treasury interest rates, a market source said.

The yield on the benchmark U.S. Treasury one-year moved up after the U.S. Senate adopted by 51-49 votes a budget blueprint for 2018, which raises hopes for U.S. tax reform legislation. The yield on the 10-year was last 2.379%.

Bahrain’s new Nogaholding 7˝% notes due 2027 traded higher to 102 bid, 101.2 offered on Friday from 101.85 bid, 101.95 offered on its debut on Thursday after the sovereign priced $1 billion of the oil and gas notes tighter than initial talk and at a spread of 516.2 basis points over U.S. Treasuries.

The spread on the new notes was tighter by about 9 bps; meanwhile, the Bahrain sovereign curve was mixed but widening moves were more pronounced than the paper that tightened.

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