NEW YORK, Oct 21 (IFR) - A new drive to impeach Brazilian President Dilma Rousseff further undermined confidence in the country on Wednesday, putting more pressure on the sovereign and other credits.
The petition follows a federal court audit accusing Rousseff’s government of doctoring fiscal accounts to hide the size of the country’s already massive deficit.
Investors worry her administration will now revise projections even lower, or that Finance Minister Joaquim Levy may resign if forced to announce more bad fiscal news.
“Why is Levy there?” one investor told IFR. “He was there to defend the country’s investment grade and keep it on a (sustainable) fiscal path, which he hasn’t been able to do.”
Bonds issued by quasi-sovereign oil company Petrobras were weaker, with the 2024s being quoted about one point lower at 76.75-77.75.
The sovereign’s 2025s found some support around 86.65 after falling about three points since last week, but still remain within spitting distance of all-time lows.
“Everyone has become a broker these days,” said a trader focused on Brazilian credits. “No one is willing to take on risk.”
But Barclays initiated an overweight position on Petrobras on Wednesday, arguing the company is too big to fail and that the restructuring scenario being priced in by the market is unlikely to happen.
It also trades cheap to US peers and about 450bp wide to the sovereign - the largest such differential for any systemically important quasi-sovereign, Barclays said.
“I am more optimistic than before, simply because I think they will be able to raise enough money (through lending backed by assets) to buy themselves time to sell assets,” said the investor.
Mexican development bank NAFIN will kick off roadshows this week as it looks to market a 144A/Reg S Green bond to international investors through leads Bank of America Merrill Lynch, Credit Agricole and Daiwa.
The state-owned bank will be in Los Angeles and New York areas on Thursday and move to San Francisco and Boston on Friday. It is expected to be rated A3/BBB+ (Moody‘s/Fitch).
Peru (A3/BBB+/BBB+) appointed BBVA, BNP Paribas and JP Morgan to arrange investor meetings in Europe from October 20 to update on the country’s financing program and discuss developments in the economy. A potential transaction may follow.
Mexican white-goods manufacturer Controladora Mabe has finished investor meetings through Barclays, Bank of America Merrill Lynch, Citigroup and JP Morgan. Ratings are BB+/BB+.
Mexican REIT Fibra Uno completed meetings with investors through Bank of America, Credit Suisse, HSBC and Santander.
Terrafina, another Mexican REIT, has finished meeting accounts as it markets a potential US$400m-$500m bond offering. The borrower mandated Barclays and Citigroup as lead managers, with Itau as co-manager. Expected ratings are Baa3/BBB-.
Brazilian airline GOL Linhas Aereas Inteligentes (B3/B-/B-) completed roadshows with Morgan Stanley, Credit Suisse and Citigroup. A deal may follow, subject to market conditions. (Reporting by Paul Kilby; Editing by Marc Carnegie)