LatAm credits hit by risk-off sentiment
By Davide Scigliuzzo
NEW YORK, April 29 (IFR) - Latin American credits weakened on Wednesday after the US reported slower-than-expected economic growth for the first quarter, while US Treasuries sold off sharply.
Bonds across the region were generally underperforming the US Treasury curve, where yields on the 10 and 30-year benchmarks rose nearly 10bp following the disappointing growth print.
"Everything in on the weaker side today," said a trading desk analyst in New York. "It seems to be a generalized risk-off type of mood, but it is difficult to pin point one factor. Obviously the move in Treasuries was surprising."
Data showed the US economy grew by just 0.2% in the first quarter - the softest print in a year and well short of the 1.0% rate that had been expected.
That widened the spreads of key Brazilian corporates Petrobras and Vale by as much as 10bp. Petrobras's 2024s and 2044s were quoted at 430bp-429bp and 470bp-460bp respectively.
"The market is melting," said a Latin America corporate bond trader in New York. "All the long bonds are better offered, down a point."
Bonds in the high-yield segment were also losing ground, with most credits quoted between a quarter and three quarters of a point lower in early trading, according to another trader.
Despite all that, however, recent bond issues appear to be holding up relatively well. A 2025 from Chilean energy company Guacolda was traded at 100.5, half a point above re-offer. Continuación...