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Bonds News

EMERGING MARKETS-Argentine peso hits new lows on deadline day; Brazil real jumps 3%

    * Argentine peso at 74 to the dollar
    * Brazil real hits highest level in two weeks  
    * Mexico's peso lags Latam peers for the week

 (Updates prices throughout; adds comments, bullets)
    By Susan Mathew and Shreyashi Sanyal
    Aug 28 (Reuters) - Argentina's peso slipped to new lows on
Friday, when bondholders are to decide whether to accept the
country's $65 billion restructuring proposal, with the Brazilian
real leading a surge among Latin American currencies against a
weakening dollar.   
    Argentina's heavily controlled peso hit 74 to the
dollar. 
    After four months of tense debt talks, multiple deadline 
extensions and amendments, the main three creditor committees
holding a large chunk of the bonds backed a deal earlier this
month, bolstering confidence that the government will get the
required level of support to allow a full deal to go ahead.

    A deal is key to pulling Argentina out of default and
reviving a country already in its third straight year of
recession.  
    Barring any unexpected hiccups, Argentina's international
sovereign bonds will be restructured, said Nikhil Sanghani,
assistant economist at Capital Economics. 
    "Now the government wants to tackle the debts owed to its
historic 'frenemy': the International Monetary Fund. But a deal
on this front won't come quickly," Sanghani said.
    As the dollar nursed losses after the U.S. Federal Reserve
signaled lower interest rates for a longer duration, riskier
currencies rallied as the rate differential makes
higher-yielding emerging market currencies more attractive.

    Brazil's real jumped 3% to two-week highs after the
country's National Monetary Council approved the immediate
transfer of 325 billion reais ($58.3 billion) to the Treasury
from the central bank to ease debt liquidity strains.

    Amid concerns that Brazil will overshoot its spending cap,
local reports said Brazil's President Jair Bolsonaro wants to
divert 6.5 billion reais ($1.2 billion) of the federal budget
into the "Pro-Brazil" infrastructure and regional development
program, more than the economy ministry had expected.
 
    Investors were also eyeing the Brazilian government's plan
to temporarily remove import tariffs on rice, corn and soybeans.
Brazil's partners in South America's Mercosur trade bloc voiced
concerns that they will lose out, mainly to the United States.
 
    Mexico's peso surged 1.2%, and looked to post its
biggest one-day gain in three weeks, still lagging major Latin
American units for the week. 
    Chile's peso pared some gains after data showed that
amid coronavirus lockdowns the country's pace of unemployment
rose the most in this decade.
    Ahead of a central bank interest rate decision on Monday,
Colombia's peso was on track to post its best session in
almost one month. A Reuters poll indicated the central bank will
deliver its last cut in this cycle, by another 25 basis points
to a historic low of 2%.
    
    Key Latin American stock indexes and currencies at 1932 GMT:
    
           Stock indexes                     Latest     Daily %
                                                        change
 MSCI Emerging Markets                         1122.97     0.51
 MSCI LatAm                                    2008.68     3.68
 Brazil Bovespa                              102049.05     1.42
 Mexico IPC                                   37854.33     0.55
 Chile IPSA                                    3872.29     -0.4
 Argentina MerVal                             46174.05    4.337
 Colombia COLCAP                               1229.85     0.38
                                                               
               Currencies                    Latest     Daily %
                                                        change
 Brazil real                                    5.4070     3.16
 Mexico peso                                   21.7539     1.75
 Chile peso                                      778.4     0.84
 Colombia peso                                 3740.92     1.97
 Peru sol                                       3.5327     0.85
 Argentina peso (interbank)                    73.9900    -0.07
                                                        
 Argentina peso (parallel)                         133     3.76
                                                        
 
    
    
 

 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru;
editing by Jonathan Oatis)
  
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