25 de agosto de 2015 / 19:18 / en 2 años

LATAM WRAP-LatAm credits recoup some losses

NEW YORK, Aug 25 (IFR) - LatAm debt markets recouped some losses on Tuesday as spreads tightened following China’s rate cuts, though traders saw little immediate upside for the commodity-reliant region.

“We have hit the tights of the day, but I don’t see us rallying any more,” said a New York-based trader. “We are not seeing any follow-through. It is not as if people are gung-ho.”

Even though oil and metal prices staged a modest rebound, Latin America remains vulnerable as investors assess values in light of a possible hard landing in China.

“We are oversold if this is not the beginning of a bigger crisis in China,” said Siobhan Morden, head of Latin America strategy at Jefferies.

The benchmark 2024s of Brazilian oil company Petrobras tightened to 625bp-615bp before settling at around 630bp-620bp on Tuesday after reaching 680bp-655bp in the previous session.

“Investors are trying to figure out what sub-US$40 a barrel means - and which credits are of most concern,” one syndicate banker told IFR. “Colombia is probably number one.”

Though Colombia’s 2024s tightened about 8bp Tuesday to 245bp, they remained substantially wider than the 181bp seen on the 2025s of fellow oil exporter Mexico.

“The problem with Colombia is that not only do they have the highest oil dependence among investment-grade credits, but there is no recognition that this oil shock is permanent,” said Morden.

The country’s local currency 10-year Treasuries - better know as TES - have sold off heavily, widening about 35bp since Friday to trade at around 7.70%.

With about 16% of the domestic TES now in foreign hands, the market is particularly susceptible to a sell-off given its relatively small size, Morden said.

Meanwhile the primary markets remain in the doldrums, though bankers say that early September should bring a string of roadshow announcements.

Several Mexican real estate investment trusts (REITs) are heard looking to raise funding in the dollar bond markets and preparing investors meetings.

“It fits the category of deals that could get done,” said the syndicate banker. “It is a new growing sector and it is not commodity related.” (Reporting by Paul Kilby; Editing by Marc Carnegie)

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