NEW YORK, March 4 (IFR) - Argentina proved to be the top performer in a mixed day for the region, where Brazilian credits came under pressure after lawmakers pushed back on President Dilma Rousseff’s austerity plans.
Brazil’s currency fell below the psychological level of 3 reais to the dollar for the first time in over 10 years after Congress rebuffed tax hikes designed to put the country’s fiscal house in order.
Credit soon followed suit with the country’s bonds suffering price swings throughout the day before recovering most intraday losses by the close.
The country’s five-year CDS, however, ended the session some 12bp wider at 250bp, after hitting 255bp, according to a New York-based trader.
“Brazil was under pressure all day,” said a sovereign bond trader in New York. “We saw locals adding to bearish trades.”
In the high-yield segment, however, some Brazilian corporate credits have been staging an impressive recovery of late.
Intercement’s 2024s for example, were bid on Wednesday at 82.5, a point higher on the day and some 10 points stronger compared to about a week ago, said the trader. Odebrecht Drilling’s 2022 were also up a point, wrapped around a cash price of 81.
Among sovereigns, Argentine bonds enjoyed a strong bid after the judge presiding over the country’s standoff with holdout investors decided to hold off a decision on whether payments on some of the country’s foreign currency, local-law notes should continue.
The country’s US dollar-denominated Par bonds closed up 1.5 points on the day at 59.50-60.00, according to a broker in New York. Discounts were quoted at 101.25-102.25.
In the primary markets, Mexico’s America Movil defied EM currency weakness to raise MXN3.5bn through a reopening of its Global 7.125% 2024 notes. The tap priced at 99.481 to yield 7.195%, or 138bp over local Mbonos, virtually flat to secondary levels.
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.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale.
Panama has filed with the SEC to sell up to US$3.04bn in debt, raising expectations that the sovereign could soon come to the international bond market. (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)