2000-05-10 Debt prices dropped sharply

Daily Brady Bond Trading Commentary

Wednesday May 10 2000 

Emerging markets debt prices dropped sharply Wednesday, led by Argentina, whose fiscal deficit reading for April was disappointing at US$630 million. The target for Q2 is a US$660 million deficit, which will be very difficult to meet.

A rout in U.S. equity markets compounded the bearish tone for EM debt, and customer selling resumed after pausing for the first two days of the week. Sensing the underlying weakness or anticipating more paper from customers, many dealers have lightened positions or gone short. Spreads are reaching attractive levels, and a short-covering bounce is likely to occur in coming days.

But we caution that supply is plentiful, and patience should lead to some bargain opportunities.

Contributed by

Credit Lyonnais Securities (USA) Inc. 


This report was prepared by Credit Lyonnais Securities (USA) Inc. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Returns set forth in this report are estimates based on internal assumptions, and any changes in these assumptions may have material impact on such estimated returns. This is not a solicitation or any offer to buy or sell securities. We, our affiliates, and any officer, director or stockholder or any member of their families, may have a position in and may from time to time purchase or sell any of the above mentioned or related securities.