EM debt steady; Mexico mostly steady after burst of positive trade; Middle East cueing up

By Rebecca Melvin

New York, Aug. 28 – Emerging markets debt was steady in light trade on Tuesday, with little follow-through action from Latin America where a burst of positive activity came on the heels of a bilateral trade agreement announced between Mexico and the United States on Monday.

Prices and spreads for Mexico’s bonds tightened on average 8 to 10 basis points on Monday.

“There was clear outperformance in Mexico, which was leading the charge for all names on what was a risk-on day,” a New York-based market source said.

On Tuesday, the strength ebbed. Mexico’s 6˝% notes due 2027 were active and slipped back to a 101 handle before ending closer to 102.2, after early trades around 102.40, which was steady from 102.00 to 102.45 on Monday.

“The [trade] agreement gave a positive lift across all of Latin America, with Mexico and low beta names outperforming,” the market source said.

Elsewhere, the Middle East and Africa region was quiet after financial markets in the United Kingdom reopened from the country’s summer bank holiday on Monday.

“It’s dull,” a London-based trader said. But new issuance was expected to be forthcoming, with a rumor that the National Bank of Oman SAOG is doing a deal, he said.

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