Brazil outperforms in rough session for LatAm credits
By Davide Scigliuzzo
NEW YORK, March 6 (IFR) - Brazilian credits held steady Friday as the rest of the region watched spreads widen after a robust US jobs report sparked a sell-off in Treasuries and equities.
The yield on 10-year US Treasuries widened by nearly 14bp on Friday to 2.245%, its highest level so far this year, as traders increased bets that the Fed might start raising interest rates this summer.
In a twist on previous sessions, Brazilian credits proved to be the outperformer Friday after short covering helped prop up prices on certain names despite the broader sell-off.
"The most interesting thing is that despite the move in rates, Brazil bond spreads didn't widen much," said a sovereign bond trader in New York.
"The market is very technical and there is probably a decent short in Brazilian bonds."
Brazil's sovereign notes ended the session little changed in price, with the 2025s last quoted at around 95.50-96.00. Its five-year credit default swaps, however, were ending the day 5bp-6bp wider at 258bp, according to the trader.
Mexico, on the other hand, bore the brunt of the slide in Treasuries and became the day's clear underperformer.
Its curve was ending between 10bp and 15bp wider in spread terms, while five-year CDS was 8bp wider at 118bp. Continuación...