Weekly Newsletter

Executive Summary: Geopolitical Whiplash & The “Greenland Relief” Rally — The trading week was defined by significant volatility stemming from transatlantic trade tensions, which eventually gave way to a powerful relief rally. Markets initially shuddered as the U.S. administration reignited tariff threats against the EU over the Greenland dispute. However, by week’s end, a relief rally sparked in global risk assets after a framework deal was secured, leading to a forceful squeeze in risk assets. While macro headlines dominated, idiosyncratic stories in Ukraine, Gabon, and India provided significant dispersion across credit stacks.

Market Visualizer

*Weekly Snapshot: Key Drivers & Regional Flows*

Regional Credit Developments

🌍 EM Ex-Asia Credit

• CEE & CIS – Ukraine (UKRAIN): The complex experienced a roller-coaster week, trading as high as +3pts mid-week on headlines regarding frozen assets. Gains were partially pared later in the week, with the curve finishing down -1.25/-0.25pts after the Kremlin noted the “territorial issue” remains unresolved.
• CEE Sovereigns – Romania: Euro-denominated bonds outperformed, tightening -5bp to -7bp.
• Hungary (REPHUN): Active in new issues with flows skewed toward hedge fund selling versus real money demand.
• SSA – Gabon (GABON): A star performer, rallying +4.25pt to +4.5pt and closing at highs on IMF headlines regarding an economic growth program.
• Benin (BENIN): Priced an inaugural 7Y sukuk at 6.2%. While the new issue initially failed to perform, it made outstanding Benin bonds look cheap, leading them to close +0.625/+1.0pts higher by week’s end.
• Senegal (SENEGL): Remained an outlier for much of the week, trading down early before rebounding +0.75/+1.0pts without new headlines.
• LatAm – Argentina (ARGENT): Continued its march higher, finishing +0.25/+1.0pts on the back of steady IMF growth projections and accelerated FX purchases.
• Ecuador (ECUA): Announced plans to issue a new 7Y and 12Y bond for $3-4b gross to finance a tender offer.
• Brazil – CSN/Braskem: CSN bonds dropped -1.0pt to -2.0pts following an S&P downgrade to B+. Braskem bonds saw volatility as investors monitored reports of an out-of-court restructuring plan.
• Middle East – Lebanon (LEBAN): Lebanon bonds rebounded +0.50pts to +0.625pts following news of an upcoming IMF mission in February.

🇨🇳 Asia Credit: China Property & HY

• Shuion: The new Shuion deal outperformed, trading up 1.5pts vs. reoffer.
• Vanke: Sentiment was supported by reports that SZ Metro will fund upfront payments for onshore bonds.

🌏 Asia Credit: Frontier & Sovereign

• India – Adani Complex: Diverged from the broader rally, trading 20bps wider for Investment Grade and -1pt to -1.5pts for High Yield. The move followed headlines that the SEC is asking a U.S. court for permission to serve summons directly to the Adanis to advance a fraud case.
• India NBFCs – Infoline: NBFC bonds were down 0.5pts after the income tax department ordered a special audit.
• Pakistan: A frontier outperformer, trading up 0.5-1pt on news of a projected $10bn investment from China.

Key Themes & Trading Flows

• The “Greenland Hedge”: Early week trading saw a risk-off tone as tariff concerns resurfaced amidst transatlantic tensions.
• Relief Squeeze: Trump’s Davos speech and subsequent restraint on tariffs sparked a relief rally, with High Yield cash moving +25ct to +1pt higher.

Week Ahead Watch Items

• Trump/Zelensky Meeting: Market watching for progress on the latest peace plan.
• Ecuador Issuance: Monitoring the market reception of the $3-4b gross new money deal.
• Adani Legal Filings: Monitoring U.S. court developments regarding SEC summons.
• Japan Politics: Assessing the impact of snap elections on global macro sentiment.

DISCLAIMER

This document is strictly confidential and is being provided to you for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or financial instruments. The information contained herein has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.

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