EM debt little changed as holiday lull sets in; Qatar sees good demand; NiQuan Energy talked

By Rebecca Melvin

New York, Dec. 14 – Emerging markets debt traded mostly little changed on Friday in what was described as a generally “tired” market.

In late trading, selling accelerated as investors sought to minimize long positions heading into the mid-December weekend.

In the Middle East and Africa region, the market was “very dull,” but Qatar was an outperformer on good demand, even though the rest of the market was “tired and ready for the weekend,” a London-based trader said.

Qatar is one of the Gulf Cooperation Countries, and this bloc is being added to the J.P. Morgan emerging markets’ U.S. dollar-denominated sovereign bond index in January. It’s a change that will increase the percentage of investment-grade, higher-credit-quality, low-spread names in the index, and is anticipated to dampen volatility.

“My outlook is that the EM sovereign credit spread will remain in a range,” a New York-based strategist said about 2019.

Heightened volatility has taken a toll on markets in recent weeks and now that the end of the year is in sight, many market players are looking only to make minor tweaks in portfolios into the finish.

Given the seasonality, “any active investment decisions are going out the door at the end of this week,” the strategist said.

The primary market was quiet again, but Trinidad and Tobago’s NiQuan Energy LLC, is expecting to be able to price $100 million to $150 million of 10-year notes to yield between 10¼% and 10½%, according to a market source.

But some doubted the deal, which was set to be issued by subsidiary NiQuan Energy Trinidad Ltd., would be able to be completed given currently volatile market conditions.

“I guess at a price everything sells, but I wouldn’t count on it,” a New York-based market source said.

The deal was announced initially on Dec. 4, and roadshow meetings were scheduled to wrap up on Thursday. Oppenheimer and Republic Bank are joint bookrunners of the deal, which could potentially price next week.

The company is a gas to liquids plant operator in Trinidad and Tobago.

In the broader markets, U.S. Treasuries rose, pushing down the yield on the benchmark 10-year Treasury to 2.9%. U.S. stocks were sharply lower, with the Dow Jones industrial average closing down 496.87 points, or 2.0%, to 24,100.51; the S&P 500 stock index closed down 50.59 points, or 1.9%, to 2,599.95, and the Nasdaq Composite Index closed down 159.67 points, or 2.3, to close at 6,910.66.

© 2015 Prospect News.
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