LatAm credits moving lower as risk aversion rises
By Paul Kilby
NEW YORK, June 16 (IFR) - The primary market was very quiet and LatAm credits traded flat to slightly wider on Tuesday, but bankers still remain hopeful of some pickup in issuance after the FOMC meetings this week.
Trading volumes were light and spreads on key deals like Petrobras's 2024s had inched a couple of basis points wider to trade at 437bp-432bp. Its Century bond was trading essentially flat to Monday's close at 522bp-517bp.
Risk aversion is infecting most credits in the region, even those benefiting from positive news.
Higher crude prices and a Bank of America Merrill Lynch report saying that oil-rich Venezuela should receive a US$5bn loan disbursement from China in the next two quarters has failed to lift bonds issued by the beleaguered sovereign on Tuesday.
Earlier in the session, Venezuela 2027s were being quoted at 41.40-42.15 after trading 42.00-42.75 on Monday.
"Everything around Venezuela remains heavy," said a second trader. "People need to see this disbursement first and no one is giving them the benefit of the doubt."
China has become an important source of financing for the South American country, which according to BAML, will require US$20bn to cover funding needs this year.
A major reason for this forced lull in Latam markets is the news out of Greece. "Accounts are nervous, more so in Europe than in the US, but volumes are light and investors are hedging their portfolios," said a New York based investor. Continuación...