Brazil bond rally fades following Senate vote on president
By Paul Kilby
NEW YORK, May 12 (IFR) - Brazilian credit markets were giving back gains on Thursday after an initial pop following news that the country's Senate had voted to put President Dilma Rousseff on trial.
The country's bond markets have enjoyed a strong rally leading up to Congress's decision to carry out an impeachment process.
But investors are holding judgment at this stage given the enormous difficulties faced by the new president in pulling the economy out of its worst recession in decades.
"We have come so far," said a New York based trader. "People are buying the rumor and selling the fact. Now the hard part begins."
After hitting an intra-day high of 105.00-105.25 earlier in the session, the country's 2026s have now slipped back to 104.75-105.00.
Those bonds have climbed a good seven points since March 16, when they were spotted at 97.75.
It is a similar story with Brazil's five-year CDS which is now trading back at 328bp-332bp after tightening to 316bp earlier Thursday morning.
"If you were going long into this (impeachment process) you are probably supposed to ring the registers by now," said one New York based trader, who noted some profit-taking Thursday. Continuación...