Ukraine closer to restructuring debt; fire shuts down Pemex oilfield; Pacific Rubiales up

By Christine Van Dusen

Atlanta, April 6 – Emerging markets investors were focused on Ukraine on a quiet Monday for the asset class – with Europe out on holiday – after the sovereign’s government approved the framework for a restructuring of its debt.

“It gave no new details on what terms Kiev would propose to investors,” according to a report from Schildershoven Finance BV. “Talks were expected to start last week, but Ukraine had yet to send a restructuring proposals to bondholders. According to Russian Deputy Finance Minister Sergey Storchak, talks on restructuring Ukraine’s debt to Russia are not being held and Moscow expects Kiev to pay off the bonds by the end of this year.”

The State Export-Import Bank of Ukraine (Ukreximbank) and OJSC Oschadbank will be subject to a liquidity target set by the International Monetary Fund, “given the two banks’ importance for the domestic banking system,” said Fyodor Bagnenko, a fixed income trader with Dragon Capital.

Meanwhile, the conflict in Donbas was “marginally tenser,” he said, “but overall can still be characterized as subdued.”

SriLankan Airlines was also in the news on Monday morning after the company looked to investigate an abuse of power.

“It’s unclear yet whether this investigation will have any effect on the company itself,” Schildershoven said.

Looking to Latin America, Mexico’s Petroleos Mexicanos SAB de CV received attention after a fire on one of its oilfields shut down production for several days.

“Currently there are no estimates on the costs of damage from the fire, but investors should not expect any substantial effect on the company’s credit metrics,” Schildershoven said in a report. “The company’s bonds may be interesting for conservative investors who want to invest in Latin America’s oil industry.”

Pacific Rubiales climbs

The day also saw Brazil-based Pacific Rubiales Energy Corp.’s bonds tick up on stronger oil prices, a trader said.

The company has been in the news several times recently, reporting disappointing earnings, suspending dividends and seeing its bonds plummet after a contract change with Ecopetrol SA meant other operators would likely run Rubiales Field.

“A quiet day with Europe out, though a very strong oil day means Pacific Rubiales bonds are higher,” the trader said. “Up 1 point to 1½ points, with the 2023s the most active.”

Overall, trading was slow on Monday morning, in part because investors were avoiding risky assets after a weaker-than-expected jobs report from the United States, another trader said.

“Markets are dead today,” he said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.