Region sees mixed start as Brazilian assets catch bid
By Paul Kilby
Feb 11 (IFR) - - Latin American credit markets were opening mixed Wednesday as investors bought Brazilian assets on the cheap but sold Venezuelan bonds.
Brazilian oil entity Petrobras saw its bonds holding steady despite another slide in crude prices today, with 2016s, 2024s and 2044s being quoted at 540bp, 550bp and 560bp, respectively.
Meanwhile Banco do Brasil perps were roaring back to life after steep declines over the last week, with its 9% perps jumping to a high of 80.00 today after trading at 77.00 Tuesday.
"Banco do Brasil has dropped 10pt over the last week and today they are up three points," said a New York-based trader. "We have seen some real-money accounts buying the credit."
This comes after analysts at Citigroup yesterday put out a report saying that the recent recovery in oil prices underscored just how expensive Brazilian quasi-sovereign banks were.
State-owned banks were trading too tight to the sovereign when compared to Russian credits, and too tight to Petrobras as well, Citigroup said.
Meanwhile Odebrecht - one of several construction firms under investigation for corruption connected to contracts with Petrobras - was also catching a bid and coming off recent lows. The long-end of its curve rallied several points this morning, with the 2042s jumping to a 67 bid.
"They are very cheap," said the trader. "This was a falling knife, but now we are seeing some demand." Continuación...