LatAm credits give back some gains on rate woes

miércoles 13 de mayo de 2015 16:36 GYT

By Paul Kilby

NEW YORK, May 13 (IFR) - Latin American credit markets were giving back some earlier gains on Wednesday as investor concerns about US Treasury volatility began to take their toll on sentiment.

Despite the release of weak US retail sales figure, the yield on the 10-year Treasury was back up at 2.28% by late afternoon, adding to the unease over the direction of US rates.

"People are skittish around rates," said a New York based trader. "With the 10-year back near 2.30%, investors are nervous about buying duration or even 10-year paper."

Still, prices on some Latin American debt were holding their own well. Brazil 2025s closed at a mid-market price of 98.125, up from 97.65 seen yesterday, according to Thomson Reuters data.

This is even after Moody's warned today of increased liquidity risks in corporate Brazil.

"About a third of the Brazilian companies we reviewed have high funding risk due to weak cash coverage of short-term debt, a lack of committed credit facilities or likely low cash flow over the next one to two years," Moody's said.

Meanwhile, Fitch downgraded Brazilian sugar company Tonon Bioenergia to CCC from B-, warning about escalating refinancing risks ahead of a US$12m coupon payment due Thursday on its senior secured 2024s.

Those bonds were quoted at 47.125-48.875 after being bid Tuesday at 47.25, a broker said. While that is lower on the day, it is higher than the 35.875 seen on April 16 following news that the company was looking to restructure its dollar debt.   Continuación...