Brazil underperforms in otherwise firm market
By Davide Scigliuzzo
NEW YORK, Feb 6 (IFR) - Latin American credits were headed for a mixed close on Friday, with Brazilian names underperforming while the rest of the region held up in price despite the widening in US Treasuries.
"Brazilian corporate and sovereign bonds are somewhat under pressure today and we are seeing better sellers of quite a few bonds," said a trader in New York. "Other markets are holding in better."
Brazil's five-year credit default swaps were ending the session 4bp to 5bp wider, while protection on Mexico and Colombia was flat to 1bp tighter on the day.
Petrobras shares tanked more than 8% and its bonds widened after Brazilian President Dilma Rousseff tapped Aldemir Bendine, the chief of state-run Banco do Brasil, to be the new CEO of the embattled oil giant.
The Petrobras board confirmed him in the job over the objection of non-government board members.
The company's 2024 bonds were seen closing some 10bp-15bp wider on the day at a spread of around 550bp, with the market reacting negatively to the appointment.
"He is someone close to (Rousseff's party). And who is going to manage the bad news as it comes out? Not someone who is going there to clean up the company," said the trader.
"You also have to question why a senior banker is going to be the best person to lead an oil company." Continuación...