LATAM WRAP-LatAm spreads mostly wider but finding bids
By Paul Kilby
NEW YORK, July 15 (IFR) - Brazilian credit spreads were inching wider on Wednesday as prices failed to keep up with a rally in US Treasuries, though traders continued to report a firm bid for the country's bonds.
The 2024s issued by troubled state-owned oil company Petrobras were quoted at 433bp-423bp, while its Century bond was spotted at 515bp-510bp.
"We are 4-6bp wider but well bid," said a New York-based trader.
The yield on the 10-year US Treasury shrunk to 2.35% in early afternoon trading as investors once again fretted about global growth prospects even as they braced for a US rate hike later this year.
However, regional currencies, including the Brazilian Real, have sunk against the dollar after Federal Reserve Chairwoman Janet Yellen indicated before Congress that the bank was set to kick off monetary tightening in coming months.
Meanwhile, investors have already priced in a Moody's sovereign downgrade to Baa3, a notch above junk, as the agency kicked off meetings Wednesday with Brazilian government officials. But spreads could widen further should Moody's threaten a demotion to junk territory by putting the sovereign on negative outlook.
Elsewhere, in the Brazilian corporate space, bonds issued by Oi tumbled about a point on Wednesday after Fitch cut the telco's rating to BB from BB+ with a negative outlook. By early afternoon the company's 2020s and 2022s were being quoted at 90.25-91.75 and 85.25-86.25, respectively.
As justification for the move, Fitch cited a tough operating environment, weak cash flow and high leverage. Continuación...