NEW YORK, Dec 18 (IFR) - This is the last of IFR's regularly scheduled market wraps for 2015. We wish all our readers a cheerful and peaceful holiday season. We look forward to providing you more of the best capital markets coverage when we come back to our desks on January 4. Happy New Year from all of us at IFR.
Brazil's sovereign bonds plunged Friday to their lowest since at least the financial crisis on worries that fiscally conservative Finance Minister Joaquim Levy could soon leave his post.
"The market is in a meltdown," one New York-based trader told IFR, saying the country's bonds were between 1.25 and two points lower in price - or 25bp and 30bp wider in spreads.
Sources told Reuters that President Dilma Rousseff is looking to replace Levy, who has clashed with her administration over his unpopular austerity plan to rescue public finances.
Brazil's 2025 and 2045 notes were quoted at cash prices of 81.5 and 66.5 respectively in the early afternoon, according to MarketAxess data.
While the market reaction appeared harsh, Levy's departure would not come as a surprise to many in the market.
"There has been a back-and-forth on that for quite a while," said a syndicate banker covering the region.
"It is more negative news for Brazil, but I don't think I have seen any positive news out of Brazil in at least a year."
The country's political and economic malaise is likely to add to a challenging backdrop for Latin American borrowers looking to tap the bond markets in January.
"It all depends on oil prices," said the banker. "Ï expect some (issuers) to come out in January, but it is not going to be as many as usual."
Brazil's five-year credit default swaps widened by 11bp on Friday to end the day at a mid-price of 489bp, close to the wides reached earlier in the week in the wake of the sovereign's downgrade to junk. (Reporting by Davide Scigliuzzo; Additional reporting by Reuters News; Editing by Marc Carnegie)