EM bonds trade quietly; rate move in focus; Bahrain’s oil paper strong; Venezuela weak

By Rebecca Melvin

New York, Oct. 20 – Emerging market credit traded quietly and spreads were narrowly mixed on Friday as market players watched a push higher in U.S. Treasury rates, a market source said.

The “rates move was the biggest event of the day,” the market source said. Meanwhile, the trading session was quiet particularly into the market close.

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

The spread on the new notes was tighter by about 9 bps on Friday, according to a market source. Meanwhile, the Bahrain sovereign curve was mixed, but widening moves were more pronounced than the moves of paper that tightened.

Elsewhere, “people were getting nervous about next week amortizations” of Venezuela and Petroleos de Venezuela SA bonds.

There was “lots of supply,” an East Coast-based trader said on Friday.

The Venezuela and PDVSA bonds have gradually weakened for much of the week after Sunday’s regional elections in Venezuela revealed a resounding but unexpected victory for the ruling socialist party. On Monday, most of the curve was down by about 2 points.

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