LATAM WRAP-More woes for Brazil bonds after impeachment report
By Paul Kilby
NEW YORK, Dec 2 (IFR) - Investors were keeping a cautious eye on Brazil again Wednesday after the local press reported that impeachment proceedings had been opened against embattled President Dilma Rousseff.
While the news broke late in the day, the sovereign's 2025s inched about a 1/4 point lower to hit around 85.50-85.75, while five-year CDS was being quoted at around 453bp.
"The news has still got to sink in," one broker told IFR.
The move is likely to complicate the Brazilian credit story at a time when the arrest and resignation of BTG Pactual CEO Andre Esteves last week has sent its bond prices reeling.
"In the short term this will increase uncertainty," said Pablo Cisilino, a portfolio manager at Stone Harbor.
"Impeachment is not something that happens overnight. It is a very long process."
The political battling is likely to draw attention away from fiscal reforms that are badly needed to get the region's largest economy back on track.
"It is not good news for the fiscal consolidation process because it will delay the 2015 and 2016 budgets," said Alejo Czerwonko, an economist in the chief investment office of UBS Wealth Management. Continuación...