Emerging markets quiet but firm amid holidays; Kenya widens after ruling for new election

By Rebecca Melvin

New York, Sept. 1 – Emerging markets spreads were quiet but firm on Friday with market activity muted by the fact that the United States was headed into the three-day Labor Day weekend and Muslim countries around the world were celebrating Eid holidays.

In the primary sphere, emerging markets saw a mix of local currency and major currency pricings in Asia, but other regions were quiet.

In dollar-denominated deals, Hong Kong-based financial and securities holding company Sun Hung Kai & Co. (BVI) Ltd. priced $400 million of 4.65% guaranteed notes due 2022 at par.

Markets players were looking forward to next week when primary markets are expected to reopen on Tuesday after the Labor Day Monday.

An exception to strength seen in general across regions was Kenya, where credit spreads widened out about 18 basis points after a court ruled to nullify last month’s presidential election and hold a new one, a London-based trader said.

The Kenya court upheld the complaint of opposition candidate Raila Odinga, who claims the incumbent, President Uhuru Kenyatta, won the election by vote rigging.

Now an election must be held within 60 days, and opinion was divided whether the unprecedented decision – which caused Kenya’s stocks to swoon, credit to widen and the shilling to weaken – would spark further unrest and violence or whether it would be healthy for democracy and sovereign risk.

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