LatAm credits end week better bid as Petrobras recovers

viernes 27 de febrero de 2015 16:51 GYT

By Davide Scigliuzzo

NEW YORK, Feb 27 (IFR) - Latin American credits ended the week in better shape, with sovereign and corporate bonds enjoying a strong bid as accounts continued to see value in battered Brazilian names.

Bonds spreads of Brazilian state-run oil company Petrobras tightened by 20bp on average Friday, with the 2024s closing at around 545bp and the 2044s quoted at around 550bp, according to a New York-based trader.

The notes have been slowly recovering since late Tuesday, when the company's rating was downgraded to junk by Moody's, but they are still some 20bp wide to their pre-downgrade levels.

"I think the market over reacted (to the downgrade)," said the trader. "But we are going to see volatility and we are far away from the problem being solved."

Iron-ore producer Vale also saw better buyers on its bonds, in spite of posting full-year net income well below analyst forecasts on Thursday. Short covering helped support prices, said the trader.

Vale's 2022s and 2042s were seen closing some 15bp tighter at spreads of 280bp and 385bp respectively.

Among high-yielding credits, a new 2025s issue by Mexican cement company Cemex were up nearly a point after trading down in the grey market on Thursday, according to a second bond trader. He had the notes quoted at 100.75-100.90 at the close, up from a reoffer price of 99.98.

Meanwhile, primary activity is expected to remain relatively busy next week, with America Movil and Costa Rica both preparing bond sales.   Continuación...