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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Matthew L. Jones who wrote (24028)	8/27/1999 7:46:00 PM
From: donald sew	Read Replies (1) \| Respond to of 99985

Hi all, Not sure how important this news is. Friday August 27, 6:31 pm Eastern Time EMERGING DEBT--prices mixed, concerns on Venezuela By Ross Finley NEW YORK, Aug 27 (Reuters) - Emerging market debt was mixed Friday, with Venezuelan and Argentine bonds the most actively traded as the market waited for announcements by Ecuador on the terms of the first-ever restructuring of Brady bonds. Venezuelan debt sank on news of a protest against President Hugo Chavez outside the Congress in Caracas, traders said. Demonstrators clashed with police and Chavez loyalists in the largest anti-government street demonstrations since Chavez took office six months ago. ''We saw some interest in Venezuela earlier in the day, but that interest turned around quickly,'' said Juan Pablo Chavez, Latin America strategist at IDEAglobal.com. ''Obviously all of this political turmoil is going to increase the downside for Venezuelan bonds,'' said IDEA's Chavez, who underlined he is not in any way related to the Venezuelan president. Venezuelan PARs were down 3/4 to 62-1/4 bid. DCBs , which traders said had the most active volume, were down 1-1/8 to 72 bid in late Friday trade. DCB's were down 2 full points earlier Friday. ''Today's movements were just indicative of concern about the political developments surrounding the Constituent Assembly,'' said Amy Auster, an emerging markets analyst at Chase Securities. ''And there's a lot more barking than biting.'' Chavez gave a speech after the protest in which he tried to assuage concerns that sweeping changes being made to the constitution are not an attempt to set up authoritarian rule. ''The world must know that in Venezuela the rule of law is not being damaged and will not be damaged...there is no authoritarian process here,'' Chavez said in his speech. Analysts said Chavez's speech had a calming effect on the markets -- though not calming enough to reverse earlier losses. Chavez, a former paratrooper, was the leader of a bloody but failed coup attempt in 1992. But market watchers also said the specter of the first-ever Brady bond coupon payment deferral -- scheduled for Tuesday, August 31 -- still hung heavy over the market. Ecuador asked financial markets for their support Thursday in their efforts to restructure some of its $13 billion in debt. Emerging market investors are now anxiously awaiting an announcement expected next week on the terms its new restructuring, analysts said. In late Friday trade, Ecuador DISC's were down 1 to 31-1/2 bid. PARs were 5/8 softer to 30 bid. While most analysts did not expect the terms of the restructuring to be positive for the market, some said that Ecuador's restructuring of its Bradys should not necessarily have a far-reaching effect on emerging market debt prices. ''Whatever the implications are for Ecuador's moves for other countries, the underlying collateral value of Bradys will not go away,'' said David Roberts, senior international economist at NationsBanc Montgomery Securities. ''The liquidity is questionable, but not the collateral.'' Argentine bonds were firmer on Friday, with FRB's were 1/2 firmer at 85-1/8. GB-17's were up 1 point to 87-1/4 bid. GB-27's were up 1-1/2 point to 77-3/4 bid. ''The FRB's were by far the most liquid asset -- Argentina has rallied pretty strong today,'' said an emerging markets trader. Analysts said the announcement on Friday that the ruling Peronist party will make a new tax cut and job creation the centerpiece of its campaign platform in the upcoming elections was cause for a small rally. A Gallup poll released Friday showed that Eduardo Duhalde -- the Peronist candidate slated to succeed President Carlos Menem -- is trailing Fernando de la Rua of the center-left Alliance by 13 points. Mexican debt was mostly flat, with the PAR's and DISC's unchanged at 72-1/4 and 82-3/4 bid respectively. Brazilian bonds were also mostly unchanged, with the benchmark ''C'' bond , the most widely traded Brady bond, up 1/4 to 60-1/8 bid. biz.yahoo.com