Sovereign Bond Spreads:

 

Significant New Issuance - CSFB Commentary:

?	The emerging debt markets rallied this week as the long expected new IMF package for Argentina was finally announced on Tuesday. Argentina will receive US$8bn in new loans from the IMF, of which US$5bn will be allocated next month to reinforce reserves that were depleted as a result of massive savings withdrawal. Another US$3bn will be extended if Argentina obtains an agreement to cut financing costs through a debt swap and possible buyback. The rally in Argentina spilled over first to the higher yielding EM assets (Brazil, Turkey etc), then helped other credits, although the impact was softer. However, the Argentine problem is far from solved, as the Republic's government still has to deliver on its promises of a zero budget deficit and debt restructuring, therefore the medium term outlook is still cautious. The Turkish market traded up after the Argentina package was announced; the rally was also helped by the satisfactory T-Bills auction results and other positive news from the country. For Russian assets, the IMF announcement was also a long awaited boost: volumes increased significantly with prices climbing by more than 2 points. The Russian US$ yield curve is getting very steep because most of the supply that we see is concentrated in Russia 2030, while the buying interest is spread across the curve. Central and Eastern European asset prices were on average ? point higher on the week with Poland underperforming other countries after the S&P changed its outlook on foreign currency rating for the Republic from "positive" to "stable". The EMBI+ Index tightened by 50 bps in one session on Wednesday and closed 29 bps tighter on the week.
?	On Tuesday the FOMC cut the Fed Funds rate for the 7th time this year by 25 bps to 3.50%, the lowest since April 1994. The accompanying Fed statement pointed at the slowing global growth and weakening business profits and capital spending in the US, thus suggesting further easing is possible.
?	As market conditions remain difficult and we are still in a traditional August holiday period, primary market activity is very slow but expected to soar in September with a number of deals waiting in the pipeline.