By Kejal Vyas Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Emerging market debt weakened Monday, tracking a mostly weaker day for U.S. stocks on renewed concerns over Europe's sovereign-debt problems.
Investors also made room for a flurry of new bond issuance as borrowers continued to take advantage of ample liquidity and lower yields. The governments of Turkey and Jordan sold bonds, while Peru is expected to tap the market later in the week. A string of companies from around the developing world also sold bonds on the international capital markets.
The risk premium on J.P. Morgan's Emerging Market Bond Index Global, the benchmark measure for the asset class, widened one basis point to 272 basis points over Treasurys. The index fell 0.44% in price terms.
Volatile bonds from Argentina and Venezuela faced the brunt of the declines, while Peruvian debt also slipped ahead of the country's new debt sale.
The declines in asset prices come after weeks of gains in the run-up to the U.S. Federal Reserve's meeting last week when new quantitative-easing measures were announced. Analysts and investors are expecting much of the extra liquidity in the market place to be put toward emerging-market assets as investors look for higher yields at a time when the developed world continues to carry low interest rates and less-promising economic prospects.
Weighing on sentiment Monday were concerns over the debt in Ireland, Portugal and Spain, as investors drove funding costs for all three countries higher while the costs to insure their debt against default also rose.
Those concerns, however, didn't halt new borrowers from tapping the market.
The Hashemite Kingdom of Jordan raised $750 million through the sale of a five-year bond that priced at 98.881 and carries a yield of 4.125%.
The Turkish government, meanwhile, raised EUR500 million in a reopening of its 2020-dated bond, offering investors a yield of 4.25%.
Turkey's risk premium on the Embig index was three basis points tighter at 150 basis points over Treasurys, though the bonds dropped 0.25% in price terms.
Also, bankers working on Peru's bond sale told Dow Jones Newswires that the country is likely to sell bonds later in the week as government officials wrap up an investor roadshow. The country said in an SEC filing earlier in the day that it plans to sell at least $500 million in dollar bonds.
Lebanon, too, was preparing a two-part dollar bond transaction. The country is seen pricing an eight-year bond at least worth $500 million, with a yield between 5.15% and 5.20%.
Meanwhile, the 12-year tranche will price between 6.10% and 6.15%, and will have a size of $225 million, higher than the initial minimum size of $200 million.
Elsewhere, Anheuser-Busch InBev NV (BUD, ABI.BT) plans to sell five-year Brazilian real-denominated global bonds as soon as Tuesday, according to people familiar with the deal. The securities, which will mature in November 2015, are expected to yield between 10% and 10.125%.
"The sale makes sense because so many people want the real [exposure]," said Eric Ollom, head of emerging-market debt strategy at Jefferies in New York.
-By Kejal Vyas, Dow Jones Newswires; 212 416 2185; kejal.vyas@dowjones.com
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured article: Beyond Hiroshima - The Non-Reporting of Falluja's Cancer Catastrophe.
No comments:
Post a Comment