Some EM bonds under pressure; China Oceanwide, Peking University, Sagicor, Indonesia price

By Christine Van Dusen

Atlanta, Aug. 4 – Many emerging markets bonds remained under pressure on Tuesday, even as the larger market’s tone improved and commodities recovered, after a Federal Reserve official said that it makes sense to hike rates in September.

Investors have been expecting the Fed to wait longer before instituting a rate increase.

In response to this and weakening U.S. Treasuries, Latin America low-beta spreads moved wider and cash prices gapped lower on Tuesday afternoon, a New York-based trader said.

Five-year credit default swaps spreads for Brazil moved to 304 basis points from 301 bps while Mexico’s moved to 138.50 bps from 138 bps. Mexico’s 2025s traded at 99.05 from 99.35 and its 2044s moved to 97 from 97.40, he said.

From Asia, investment-grade cash bonds were wider by 2 bps to 5 bps amid mixed flows on Tuesday morning, a London-based trader said.

“But we are seeing more outright sellers taking profit in the 10-year bucket while demand in the short end remains strong,” he said.

China-based Cnooc Ltd. saw its 2025s moving wider to trade at 177 bps while China Petroleum & Chemical Corp.'s (Sinopec Group) 2025s traded at 159 bps.

Meanwhile, the primary market on Tuesday hosted new deals from China Oceanwide Holdings Group Co. Ltd., China’s Peking University Founder Group Co. Ltd., Barbados-based Sagicor Financial Corp. and Indonesia.

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