LATAM WRAP-Impeachment worries hit Brazil credits
By Paul Kilby
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. Continuación...