Brazil takes center stage in weaker LatAm credit market
By Paul Kilby
NEW YORK, March 13 (IFR) - A relentless roster of bad news out of Brazil were hurting bond spreads on the country's credits Friday.
State-controlled oil company Petrobras is watching its bonds start some 20bp wider, said traders. The company's 2024s and 2044s were opening at 556bp-548bp and 546bp-536bp, respectively.
"Positions are light and you can easily move this market," said a New York based trader. "I don't think the Street is long Petrobras."
Local press reports about the oil company talking to lenders over a possible waiver on its deadline for the release of audited release has only served to exacerbate the markets nervousness.
With an increasing number of companies being pulled into the corruption scandal focused on Petrobras, investors are largely taking a hands off approach to the broader Brazilian market.
Such fears are driving the sovereign's CDS wider and pushing the Real to new highs against the dollar. The Real was being quoted at 3.24 Friday - a new 10-year high - while sovereign protection now cost around 300bp. The sovereign's 2025s also dropped another point Friday to hit 94.00 this morning.
The rest of the region has largely been immune to the fallout from Brazil but nonetheless looks weaker as emerging market currency come under increasing pressure and crudes sink lower.
"Generally it is very negative with headlines out of Brazil weighing on the market," said a broker in New York. "Risk appetite for corporates is weak and spilling over into the corporate space outside of Brazil." Continuación...