Gulf International, Octal pull deals; new Romania notes a bit wider; Latin America strong

By Rebecca Melvin

New York, Oct. 5 – Emerging markets debt was mostly weaker again on Friday as U.S. Treasury yields pushed up for a third straight day, and two deals were pulled from the Central & Emerging Europe Middle East and Africa region, but Latin America spreads were holding in pretty well, and Brazil outperformed, according to market sources.

Bahrain’s Gulf International Bank BSC postponed its planned U.S. dollar denominated five-year note amid climbing Treasury rates.

Oman-based Octal Holding SAOC, a PET sheet and resin producer, also postponed its proposed $300 million offering of senior unsecured notes (expected rating: /B+/).

The U.S. Labor Department's monthly jobs report on Friday showed rising wages, a sharp revision higher in August's nonfarm payrolls, and an unemployment rate that stands at its lowest level in nearly five decades.

The yield on the benchmark 10-year Treasury note was higher at 3.233% on Friday, up from 3.196% on Thursday.

Romania’s two new issues were trading about 3 basis points to 4 bps wider early Friday, which wasn’t surprising given the weaker broader market, a market source said.

But Latin America was looking pretty good, a New York-based market source said. “This is positive for EM credit. So while overall funding cost is going up, investors still see compelling value in EM and should be even more willing in the context of higher overall yields.”

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