LatAm credits markets take breather after Brazilian rally

miércoles 15 de abril de 2015 10:03 GYT

By Paul Kilby

NEW YORK, April 15 (IFR) - Latin American credit markets took a breather Wednesday as investors garnered profits after a strong run up in Brazilian bond prices.

News earlier this week that Petrobras's board would meet April 22 2014 to approve 2014 audited results sparked a relief rally in Brazilian debt amid hopes that the oil company would meet covenant deadlines and avoid a downgrade to junk.

Petrobras 2024s were once again inching tighter Wednesday morning to be quoted earlier at 438bp, but traders see little upside from here.

"We are really quiet," said a New York-based trader. "People want Petrobras to get their results out so they don't get accelerated, but I don't know if we go much tighter. We have had a nice run-up."

Still, a better tone in Brazil has brought support to a primary market that has seen comparatively little supply this year.

BBVA Colombia is heard attracting a crowd ahead of a possible deal this week. Market participants are discussing low 300bp over Treasuries for its Tier 2 bond given that Colombian banks Davivienda and Bancolombia have sub debt due in 2022 trading at around that level.

"I would think they announce slightly above 300bp," said a second trader. "This new one is a 2025 so the market is asking for a bit more."

This comes as Colombian state-owned oil company Ecopetrol also prepares to raise funding in the capital markets following government approval to issue up to US$3.175bn in bonds. The news sent the company's bond prices lower this morning, with the 2025s being quoted at 97.875.   Continuación...