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NEW YORK, Feb 18 (IFR) - Brazilian names led another rally in Latin America Wednesday as local investors returned from Carnival celebrations to put money to work in what remains a strong market.
"Brazil is doing particularly well," said the trader. "Many who came back from Carnival had missed the rally."
Traders and investors shrugged off recent volatility in the US Treasury market, where the yield on the 10-year note dropped by as much as 8bp to hit 2.07% after the Federal Reserve minutes cast doubts over the bank's confidence in moving ahead with a rate hike in June.
"Things feel definitely better on balance today and risk (appetite) feels pretty good," said a syndicate banker in New York. "We saw a bit of movement after the FOMC (minutes). People took them as more dovish than expected.
Bonds issued by Brazilian state-run oil company Petrobras, for example, ended the session some 15bp tighter at the short end of the curve and 5bp tighter in the belly, according to a corporate bond trader in New York. Its 2024s ended the day at a spread of 502bp-498bp, or 5bp tighter.
Bonds issued by Brazilian miner Vale were also closing between 6bp and 8bp tighter across the board, with the 2022s being spotted at a spread of 273bp-268bp.
Bucking the trend were several oil related names in the region and Brazilian state-run bank Caixa, which saw their bonds closing a touch weaker on the day. Pemex 2046s, for example, were 2bp wider at a cash price of 100.50-100.85.
Meanwhile, sovereign debt, which had been lagging corporates, finally found some inspiration in this afternoon's Treasury rally.
"Brazil, Mexico and Colombia were all trading higher after FOMC (minutes)," said a broker in Miami. "That's when we saw all the flashing happening."
Brazil's 2025s, for example, were ending the day nearly 1 point higher at 98.1-98.5.
Mexican media company TV Azteca is bringing to market a rare project bond related to the development of the Andean country's fiber optic network. Pricing is expected toward the end of February.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale that could take place as early as this month.
Reporting by Davide Scigliuzzo; Editing by Paul Kilby