LatAm credit take a hit in risk-off market
By Paul Kilby
NEW YORK, Jan 15 (IFR) - Sinking oil prices, weak US economic data and continued concerns about Brazil were pushing Latin American bond prices lower on Friday ahead of a three-day weekend in the US.
"There has been derisking all week," said a New York-based trader. "It seems like accounts are throwing in the towel on credit and people don't want to take positions ahead of (long) weekend."
The region is feeling the impact from a sell-off in the broader market as US stocks sink on concerns about a slowdown in China as well as worsening retail and industrial output data in the US.
The risk off tone is being reflected in the US Treasury market where yields on the 10-year US Treasury are now at 2.03%.
And while a rally in US Treasuries had provided support for the newly minted bonds from investment grade Chile and Mexico, those issues were also coming under pressure as investors looked to sell liquid assets.
"People are selling where they get liquidity," said the trader. "There are bids to hit on new issues (from sovereigns) while there aren't nearly as many bids on corporates in the secondary market."
Chile's new 10-year dollar trade - the first bond sale out of Latin America this year - was being quoted at 97.50-97.70, essentially flat to reoffer of 97.627. Continuación...