26 de agosto de 2015 / 18:58 / en 2 años

LATAM WRAP-LatAm commodity credits slide lower

NEW YORK, Aug 26 (IFR) - LatAm bond prices were largely slipping on Wednesday as commodities took another tumble on lingering concerns about Chinese growth.

Discomfort over the direction of commodity prices had investors struggling to unload miners and oil-related names in what is an increasingly illiquid market.

“Everyone is clearing their positions and getting out where they can,” said Klaus Spielkamp, head of fixed-income sales at Bulltick.

“But every day it is getting more difficult to find liquidity on both sides of the trade.”

The 2022s of Peruvian miner Volcan continued to slide south on Wednesday, quoted about 1.5pt lower at 89.90 in what is now nearly a four-point drop since last week.

Mexican sovereign debt was also underperforming on Wednesday after Moody’s put Pemex’s A3 rating on review for a downgrade the previous day.

The sovereign’s benchmark 2025s were being spotted at 97.00, down about three-quarters of a point. Those bonds were trading close to par earlier this month.

Pemex bonds have been relatively resistant to downward price pressures, but traders think further price depreciation is on the cards given how tight the company is trading to US peers.

“A downgrade has been long in coming,” said a US-based trader.

Moody’s warned that Pemex’s leverage is set to jump unless the government injects equity capital or eases the company’s tax burden.

Diminishing cash flows will impact leverage for a company that has failed to improve production levels and operating efficiencies, the agency said.

“Moody’s expects Pemex to have much greater borrowing needs in 2016 and 2017, which will push debt balances far above historic levels at a time when production is stagnant and profitability and cash flow are very weak,” it said.

Elsewhere in the region, Brazil corporate credit spreads were a touch tighter but prices remained under pressure as investors maintained their hands-off approach to the country.

“Many people are concerned that the Real will go to 4.00 (against the dollar) and they don’t want to step in until they have more certainty regarding Brazil,” said Spielkamp. (Reporting By Paul Kilby; Editing by Marc Carnegie)

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