LATAM WRAP-Weaker commodities drive debt prices lower
By Paul Kilby
NEW YORK, Nov 12 (IFR) - Concerns about weaker commodity prices were largely driving price action in Latin American debt markets on Thursday as investors started to lock in profits before year end.
Oil names continued to sink Thursday after crude hit a two and a half month low amid heightened supply concerns following data showing higher-than-expected stock piles in the US.
The 2024s issued by state-controlled Petrobras were trading about half a point lower at 80.25, while Mexican oil firm Pemex was also suffering some spread widening on Thursday.
This comes despite news that Pemex management had cut a deal with its union to lower pension benefits, allowing it to pass along billions of dollars of unfunded liabilities to the government.
The move provides some relief to a company that reported steep losses during the third quarter following this year's sharp decline in oil prices.
"Pemex was looking to open 2-3bp tighter, but we are now seeing 4bp wider," said a New York-based trader. "(But the pension agreement) should bode well for the compression of Pemex spreads against the sovereign."
Pemex 2024s were trading at 293bp over US Treasuries, wide to the 274bp seen just last week, but still far off its all-time high of 360bp on September 30, according to Thomson Reuters data.
Meanwhile, bonds issued by Samarco, the iron ore miner jointly owned by BHP Billiton and Vale, moved up slightly to 61-62 on Thursday. Continuación...