Dubai Investments cancels deal; EM debt firms after Fed signals patience on rate increases

By Rebecca Melvin

New York, Jan. 30 – The emerging markets debt market firmed after a weaker start on Wednesday after the U.S. Federal Reserve held rates steady, as expected, and signaled more caution than previously regarding further rate tightening.

Emerging markets have seen strengthening in the secondary market since Fed Chairman Jerome Powell said Jan. 4 that the Fed could readjust interest rates if global growth slowed. But the primary market has been slower than usual this past month.

Emerging markets debt investors are concerned not only about slowing global growth and U.S.-China trade talks that will impact growth, but with high levels of debt that emerging markets credits have built up in the last couple of years and as well as upcoming maturities that have to be paid out, market sources say.

A deal on the primary calendar for the Middle East and Africa region was canceled on Wednesday, a London-based market source said, noting also that trading was subdued.

Dubai Investments Park Development Co. LLC’s planned five-year dollar sukuk was pulled due to the “availability of more attractive funding alternatives for refinancing their outstanding notes,” a syndicate source said.

The Dubai-based development company had planned a benchmark-sized sukuk to be priced via subsidiary DIP Sukuk 2 Ltd.

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