Argentina, Petrobras drive price action in slow session
By Paul Kilby
NEW YORK, April 21 (IFR) - The looming release of Petrobras's financials and a local bond sale from Argentina were the main drivers of price action Tuesday in what was otherwise a quiet session for Latin American credits.
The beleaguered Brazilian oil company confirmed today that it would disclose its long-awaited audited 2014 financials after the close Wednesday, providing more support to bond prices.
Petrobras bonds were closing off their highs but spreads were ending tighter, with the 2024s being quoted at 450bp-440bp, tighter on the day by 5bps.
The moves were driven by hopes that the financials will disperse some of the concerns overhanging Brazilian credit and clear the way for new issuance from a country that has not seen one cross border bond this year.
The market will be focused on the size of potential write-downs and how the company manages the release of its numbers, bankers say.
"Everything is priced in so unless they come out with better than expected results, we are likely to trade sideways," said a New York-based trader.
Fallout from a corruption investigation at Petrobras and Brazil's flagging growth are also expected to linger and impact the country's corporate credit space, bringing more volatility in the months to come.
In a report released today, Moody's noted that Brazil had overtaken Russia as the country with the most potential fallen angels, with several credits from the South American country teetering on the edge of junk territory. Continuación...