LatAm credit ends wider as Greece, Fed hit sentiment
By Paul Kilby
NEW YORK, June 15 (IFR) - Latin American credit markets were trading against a weaker backdrop Monday, as concerns about Greek debt talks and lower oil prices weighed on sentiment.
Some stability in US Treasuries buoyed sovereigns, but overall the tone was risk-off for a region still nervous about possible US rate hikes and ongoing outflows from EM debt funds.
"In general spreads are wider, but we have had better buying of sovereigns as rates stabilized (Monday)," said a New York-based trader.
Yields on the 10-year US Treasury were back down at 2.35% by Monday afternoon, but investors lacked conviction after last week's rout in rates and ahead of the start of the FOMC meeting on Tuesday.
"People are getting tired of rate volatility," said a second trader. "They have no idea where Treasuries are going to open or close, so people are staying sidelined."
Low-beta sovereigns have caught a better bid against that backdrop, as have Colombian bank bonds, which slipped last week after Moody's changed its rating methodology, resulting in lower ratings for Grupo Aval and its subsidiary Banco de Bogota.
After dropping to around 101-102.00 on Wednesday, Grupo Aval and Banco de Bogota's 2017s were back up today at 103.50-104.125 and 103.25-104.25, respectively.
"Value investors believe in those banks as infrastructure plays and are buying them on weakness," said the first trader. Continuación...