CORRECTED-LATAM WRAP-Brazil leads region higher against bullish backdrop
(CORRECTS spelling of Samarco in 9th paragraph, and company spellings in pipeline)
By Paul Kilby
NEW YORK, Nov 17 (IFR) - Brazilian bonds were leading LatAm assets higher on Tuesday as a more bullish tone on Wall Street encouraged investors to bargain hunt after last week's sell-off.
"It is a rip-fest," said a New York-based trader focused on Brazilian bonds. "Sentiment seems to have changed, and people are being more constructive on Brazil as it has gotten cheap."
Brazilian sovereign bonds were 8bp-10bp tighter, holding up as 10-year US Treasury yields jumped to 2.3% as higher inflation expectations strengthened arguments for a December rate hike.
It was a similar story for the country's five-year CDS, which was some 8bp tighter at 415bp.
While tighter US monetary policy weakens credit conditions for Latin American issuers, many market players say they would welcome Fed action next month - and the elimination of uncertainty over the timing of a rates hike.
Still, traders were struggling to find specific reasons why Brazil was rallying on Tuesday, and largely put it down to short-covering and some bargain hunting. Continuación...