LATAM WRAP-Brazilian rally improves LatAm credit tone
By Paul Kilby
NEW YORK, Sept 30 (IFR) - A rally in Brazilian assets improved the tone in the LatAm credit markets on Wednesday, sending spreads tighter across the region.
A rare piece of good news from Brazil - Petrobras's decision to hike fuel prices - took the market by surprise and gave the troubled oil company's bonds a welcome boost.
"It is not a game-changer," said Klaus Spielkamp, head of fixed-income sales at Bulltick.
"But it is one piece of good news from the company, and that is what has been missing for quite some time."
Other Brazilian corporates and sovereign debt rallied in sympathy, bringing out buyers and leaving short players scrambling to cover their positions.
Bank paper also made a comeback, as Banco do Brasil's 8.5% perps ended the day bid at 81.00 after being offered at 78 on Tuesday.
Still, traders remain uncertain whether the rally in Petrobras and other Brazilian bonds has any legs, given the challenges faced by the region's largest economy.
A hike in local diesel and gasoline prices may "modestly bolster" cashflows, but not enough to offset the effects of lower oil prices and a weaker currency, Fitch said on Wednesday. Continuación...