LatAm credits drift higher amid decent demand
By Paul Kilby
NEW YORK, March 27 (IFR) - Latin American credit markets were drifting tighter Friday morning after a week of renewed inflows into the asset class and continued buyer interest in the region.
"It is a slow start but the tone is decent," said a New York based trader. "We are bid and we are not lower."
Sovereigns proved to be the outperformers this week with recently tapped deals from Colombia and Peru soaring in the secondary markets despite the backup in US rates Thursday.
Today the yield on the 10-year US Treasury was hovering just below 2% after the market expressed disappointment that fourth quarter GDP numbers were not revised higher.
"As long as the 2% line in the sand holds (for the 10-year US Treasury), I would expect (demand for LatAm sovereigns) to continue," said a second trader.
Colombia's 5% 2045 was trading at around 102.125 mid market Thursday, marking a good two point jump since it was reopened at 99.366 earlier this year. It was a similar story for Peru's 2050s, which were being spotted at a mid-market price of around 121 versus a retap price of 115.378.
Traders are reporting strong demand from European accounts increasingly favoring the higher yields in EM, while US real money investors are also showing interest in LatAm amid a growing perception that US rate hikes will be pushed off until at least much later in the year.
"US real money waited too long, so they are chasing the market higher and tighter," said the second trader. Continuación...