EM credit ending tough month on a weak note; Petrobras notes lower; Echo Polska on tap

By Rebecca Melvin

New York, May 31 – Emerging markets credit was weaker on Thursday as investors flinched at Trump tariff headlines and was closing out on a down beat in what has been a tough month for emerging markets bonds, a New York-based market source said.

The United States announced that it is imposing tariffs on steel and aluminum imports from Europe, Mexico and Canada. The European Union and Mexico have already promised to hit back. Mexico said it will target certain U.S. made goods.

Brazil, given its internal economic challenges in the form of worker strikes, has weakened considerably.

Five-year credit default swaps for Brazil have widened by about 50 basis points in the past month to 225 bps from 175 bps at the end of April.

On Thursday, Petroleo Brasileiro SA’s bond prices were lower in active trade. The Petrobras 5¾% bonds due 2029 slipped another ½ point, leaving the notes around the 89.5 mark, compared to a better than 90 level on Wednesday.

The Petrobras 7 3/8% notes due 2027 settled down close to 101.75, which was down from 102.5 at the end of Wednesday.

Meanwhile, Poland-focused Echo Polska Properties NV announced a roadshow for a euro-denominated offering of notes of possibly five-year or similar maturity starting next week.

Deutsche Bank, HSBC and UBS Investment Bank are the joint lead managers and bookrunners of the Regulation S deal.

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