NEW YORK, Oct 16 (IFR) - LatAm credits were catching a bid on Friday after JP Morgan upgraded EM corporate credits to neutral from underweight and EM debt funds saw their first inflows in 11 weeks.
“We have seen a bunch of buyers of Chilean and Colombian credits,” said a New York based trader. “Everything non-Brazil has been better bid.”
The long-end of Chilean copper giant Codelco’s curve was better bid as shorts were squeezed, with the 2044s trading about 5bp tighter at 285bp-275bp.
That combined with a broader equity rally on Friday amid heightened expectations of a delay in US monetary tightening has helped improved the tone in EM.
“The flood of negative headlines looks to have been reflected in the sell-off over the past months, while expectation of more accommodative central bank policy is helping sentiment,” wrote JP Morgan analysts on Thursday.
The US bank turned neutral on EM corporates on Thursday after having kept the asset class on underweight for the last five months. As justification for the move, it cited supportive technicals, loose monetary policy and improving sentiment.
Even prices in Brazil’s bond market, which have been whipsawed in recent days, was finding some support.
The country’s five-year CDS was being quoted at 430bp on Friday morning, or 17bp tighter on the day, while the sovereign’s 2025s were inching higher at 89.50-90.00. Petrobras 2024s were about a point higher at 89.50-90.00.
Elsewhere, Argentina bonds were tracking the rest of the market higher following news that leading presidential candidate Daniel Scioli had chosen Silvina Batakis as his economy minister if he wins the election at the end of this month. Bonar 2024s were about 7bp tighter to yield 9.45%.
Batakis is largely viewed favorably by the market, though some would have preferred Scioli’s economic advisor Miguel Bein.
She had a good track record when she was treasury undersecretary for the Province of Buenos Aires, which posted fiscal surpluses in 2013 and 2014, according to Credit Suisse analyst Casey Reckman.
“She is known to market participants and has been outspoken about the need to resolve the dispute with holdout creditors,” she said.
Peru (A3/BBB+/BBB+) has appointed BBVA, BNP Paribas and JP Morgan to arrange fixed income investor meetings in Europe from October 20 to update on the country’s financing program and discuss developments in the economy. A potential transaction may follow.
Mexican white-goods manufacturer Controladora Mabe has finished investor meetings through Barclays, Bank of America Merrill Lynch, Citigroup and JP Morgan. Ratings are BB+/BB+.
Mexican real-estate investment trust Fibra Uno has completed meetings with investors through Bank of America, Credit Suisse, HSBC and Santander.
Terrafina, another Mexican REIT, has finished meeting accounts as it markets a potential US$400m-$500m bond offering. The borrower mandated Barclays and Citigroup as lead managers, with Itau coming in as co-manager. Expected ratings are Baa3/BBB-.
Brazilian airline GOL Linhas Aereas Inteligentes (B3/B-/B-) has completed roadshow with Morgan Stanley, Credit Suisse and Citigroup. A financing deal may follow, subject to market conditions. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)