Qatar bank taps market; spreads tighten after Yellen remarks; Lat-Am prices tick higher

By Christine Van Dusen

Atlanta, June 6 – Commercial Bank of Qatar QSC sold notes on solid sentiment on Monday as even the start of Ramadan, as well as a significant amount of existing supply from the Middle East, couldn't stop the issuer from bringing the new deal to the market.

This occurred against the backdrop of last week’s weaker economic data from the United States and comments from Federal Reserve chairman Janet Yellen that confirmed the bank won't raise rates until the economic picture improves.

“Following the disappointing nonfarm payroll figures from Friday, all eyes [were on] Yellen today,” a London-based analyst said on Monday morning. “Should markets be right, with futures pricing in a hike probability of only 4% in June and 27% in July, this would provide some favorable grounds for EM.”

But there's a risk “that investors are pricing in a too low probability and we could end up with a correction in U.S. rates,” he said.

Looking to Latin America, spreads continued to tighten and cash prices moved higher, a New York-based trader said.

Brazil's five-year credit default swaps spreads closed Monday at 328 basis points from 336 bps while Mexico’s moved to 158 bps from 165 bps.

“The rally in EM credit carries over from last week,” he said. “Cash prices were well-bid throughout the session, with some Street-side selling in small size happening into the close.”

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