LATAM WRAP-Vale outperforms as Brazil credits stable
By Paul Kilby
NEW YORK, July 30 (IFR) - Brazilian credits enjoyed a rare day of stable price action on Thursday led by miner Vale, whose bonds were some 20bp narrower following the release of better-than-expected results.
The company showed a profit in the second quarter after suffering a string of quarterly losses due to sinking iron prices.
"It was a nice report from Vale," one trader told IFR. "They have a structure that makes them more cost-efficient than others, and that has shown up in the numbers."
The rest of the Brazilian credit complex was meanwhile trading flat to a few basis points tighter after a volatile few weeks culminated in S&P's decision on Tuesday to assign a negative outlook to the sovereign's BBB- rating.
"It was overdone," said a second trader, attributing the dramatic price swings in large part to summer illiquidity. "We shouldn't have seen a sell-off of this magnitude."
Brazil's 2025s were spotted at a 94.40-95.00 after falling all the way to 93.00 on Monday as investors reacted to the government's dramatic downward revision of surplus targets last week.
Other market players feel that Brazil may be set for another bout of volatility, however, if Moody's decides to maintain its negative outlook on a downgrade to Baa3.
Elsewhere some Argentina bonds were under pressure after the central bank and state-owned pension administrator ANSES sold dollar bonds to support the currency, according to Jorge Piedrahita, CEO of brokerage Torino. Continuación...