Fall in Odebrecht bonds baffles traders

jueves 28 de enero de 2016 16:20 GYT

NEW YORK, Jan 28 (IFR) - Traders were scratching their heads on Thursday about a multi-point drop this week in bonds issued by Brazilian construction Odebrecht.

The company's 5.25% 2029s were being quoted at a mid-market price of around 40 cents on the dollar, marking a four point drop on the week.

It is a similar story for bonds across the issuer's curve, which were seen this week in the high 30s and low 40s.

The company's debt has suffered considerable price swings since CEO Marcelo Odebrecht was arrested in June last year on charges that the family-run conglomerate spearheaded a bribery scheme at oil company Petrobras.

While the widening corruption scandal has kept the market on tenterhooks, traders say, no recent news justifies the steep fall in Odebrecht prices.

"Somebody knows something and is selling," said a US based-trader.

Prices may have come under pressure as investors dumped Brazilian assets in a "guilt by association" trade following news this week that police were carrying out raids at OAS, another construction firm, said analysts at Jefferies.

"I thought Odebrecht was bigger than Marcelo Odebrecht," said Klaus Spielkamp, head of fixed-income sales at Bulltick.

"But I guess any new chapter in the (scandal) brings more concerns."   Continuación...