May 7, 2015 / 9:04 PM / 3 years ago

LatAm credits struggle to catch up with US Treasuries

NEW YORK, May 7 (IFR) - Latin American credits ended Thursday’s session wider in spreads terms as debt prices failed to keep up with rallying US Treasuries.

“Cash bond were not moving at all,” said one broker in New York. “The market got a little firmer towards the end of the day and that stopped a bit of bleeding, but we are definitely still wider (in spreads).”

Mexico, Colombia and Brazil saw their curves widen by some 10bp on the day, especially at the long end.

“Emerging markets are trading on their own,” said a Latin America corporate bond trader in New York. “Yesterday Treasuries were lower and we had buyers and today Treasuries are up and we have unchanged bids.”

Trading in corporate names was relatively quiet, with Colombia-focused exploration and production company Pacific Rubiales getting most of the attention at the expense of other heavily traded names such as Petrobras.

“Volumes in Petrobras were lower than usual,” said the corporate bond trader. “I think guys were focusing on Pacific Rubiales front and center.”

Pacific Rubiales’s 2025 closed at a bid price of 85.5, up half a point on the day, after recovering from profit-taking on Wednesday following news that Mexican conglomerate Alfa and Harbour Energy had agreed to buy the company. Meanwhile, Petrobras’s 2024s were 5bp wider in spread terms at 410bp.

Elsewhere, Mexican tequila maker Jose Cuervo saw its 2025s end the say at a spread of around 163bp, after pricing on Wednesday at 165bp over Treasuries.

Some Andean corporates also saw some buyers, according to the traders, but prices were little changed. Banco Estado’s 2022s, for example, were ending flat at 103.875-104.375. (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)

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