EMERGING MARKETS-Brazil real underperforms Latam currencies on S&P downgrade

jueves 18 de febrero de 2016 10:42 GYT
 

By Bruno Federowski
    SAO PAULO, Feb 18 (Reuters) - The Brazilian real
underperformed Latin American currencies on Thursday after
Standard & Poor's downgraded the country deeper into junk
territory.
    Citing considerable economic and political challenges, S&P
cut Brazil's sovereign grade rating to BB from BB+ with a
negative outlook. 
    Traders said the cut means it will take longer for Brazil to
recoup its investment grade once it manages to escape ongoing
economic and political crisis.
    BNP Paribas, however, pointed out in a client note that
Brazilian credit default swaps were already trading at BB levels
even before the downgrade.
    S&P's decision contributed to a drop in shares of Brazilian
banks, which are particularly sensitive to ratings decisions. 
Stocks of Itaú Unibanco SA and Banco Bradesco SA
 were also pressured by a price-target cut by Credit
Suisse.
    Weaker-than-expected corporate results from Usinas
Siderúrgicas de Minas Gerais SA helped drive Brazil's
benchmark Bovespa stock index lower. Losses were limited
by a rise in shares of Braskem SA after the company
posted a 65 percent increase in earnings in the fourth quarter.
  
    Other Latin American markets were mostly higher as oil
prices extended their rally on expectations of an agreement to
freeze global output.
    The Mexican peso jumped for a second day after the
country announced a surprise interest rate hike, a new
intervention policy and budget cuts. 
    The currency has been strongly hit by weakness in the price
of oil, which accounts for a large share of the country's
exports and tax revenue. 
    Venezuela, also a major oil producer, devalued its currency
and raised heavily subsidized fuel prices on Wednesday as it
grapples with galloping inflation and a deep
recession. 
    "Although the adjustments are positive and cannot be
considered negligible, probably even exceeding market
expectations, we remain of the opinion that they are too little
and probably come too late," Barclays analyst Alejandro Arreaza
wrote in a client note.
    Yields paid on Venezuela's benchmark global 2027 bond
 fell even after the central bank said the country's
inflation hit 180.9 percent and the economy contracted 5.7
percent last year. 
    
    Latin American stock indexes and currencies at 1405 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
                                   Latest              
 MSCI Emerging Markets                746.53     1.46    -7.35
 MSCI LatAm                          1772.46     0.13    -3.26
 Brazil Bovespa                     41587.91     -0.1    -4.06
 Chile IPSA                          3739.45     0.02     1.61
 Chile IGPA                         18342.86     0.02     1.05
                                                              
 Currencies                                   daily %    YTD %
                                               change   change
                                      Latest           
 Brazil real                          4.0036    -0.29    -1.41
 Mexico peso                         18.1835     0.97    -5.24
 Chile peso                            698.1     0.30     1.66
 Colombia peso                       3347.65     0.24    -5.33
 Peru sol                              3.501     0.06    -2.49
 Argentina peso (interbank)          14.9700     0.20   -13.28
                                                       
 Argentina peso (parallel)             15.27    -1.24    -6.55
                                                       
 
 (Additional reporting by Paula Arend Laier; Editing by
Bernadette Baum)