Pacific Rubiales, Brazilian credits slip in quiet session

Mon Mar 16, 2015 6:11pm EDT
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By Davide Scigliuzzo

NEW YORK, March 16 (IFR) - Corporate credits underperformed sovereigns on Monday in a relatively quiet session that saw Brazilian corporates and Colombia-focused E&P company Pacific Rubiales remain under pressure.

"Corporate bonds are under pressure again," said one trader in New York. "The market is a bit of a mixed bag with equities in the G7 doing very well and some stabilization in emerging market currencies today. It just seems like there isn't much of a bid for Brazilian corporates."

While Brazil's sovereign bonds and credit default swaps were ending the day little changed, short-dated notes issued by state-run oil company Petrobras dropped by as much as two points.

The move reinforced a trend that has seen the company's curve become increasingly inverted in recent days, with the 2% 2016s spotted today at a cash price of around 93 to yield 8.4% and the 2021s seen trading at 88 to yield around 8%. That compares with a yield of 7.78% on the company's 2024.

"Even in yield terms the curve is slightly inverted," said the trader.

Elsewhere in the region, bonds of Colombia-focused oil company Pacific Rubiales recovered only slightly from their sharp morning drop, following the announcement that it will not extend a joint venture and risk participation agreements with state-owned Ecopetrol.

The company's 2025s were last quoted at 55.5 at the close, up 1.5 points from their intra-day low but still sharply lower compared to their 61.50-63.00 closing level on Friday.

Among sovereigns, cash bonds were underperforming credit default swaps, with the former seen widening by some 2bp to 5bp, while the latter were closing some 2bp tighter on average.   Continued...