Higher crude prices, weaker dollar help lift LatAm debt prices
By Paul Kilby
NEW YORK, March 20 (IFR) - An easing of outflows from EM debt funds, higher crude prices and a weaker dollar are all helping to lift prices in LatAm credit markets Friday.
"FX is the mover," said a trader. "When you see a weaker dollar and higher Treasuries that helps all risk markets."
Investors were finding some relief as EM currencies showed signs of steadying after several weeks of declines.
The Brazilian Real is off yesterday's peak of 3.29 against the dollar and was trading at 3.24 earlier Friday. It is a similar story for the Mexican peso which dropped to 15.09 against the dollar after reaching 15.27 Thursday.
US Treasuries are also extending gains with the yield on the 10-year benchmark remaining below 2% at 1.94%, and the 30-year trading at 2.51%, its lowest level since early February.
Meanwhile, the oil space was benefiting from higher crude prices, helping bolster debt prices in oil rich Venezuela, where investors have been fretting about the government's ability to meet bond payments.
"We are starting to sense that 2016 could be managed so that no default happens," Jorge Piedrahita, CEO at Torino Capital, wrote to clients this morning. "We are a minority on such thoughts."
This follows yesterday's news that state-owned oil company PDVSA had clinched about US$10bn in financing from China, further helping to boost debt prices. Venezuela 2022s were being quoted this morning at 45.50-46.50, about one point higher. Continuación...