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Bonds News

EMERGING MARKETS-Brazil's real at record low, Argentine bonds fall on likely default

    * Mexico's peso falls after surprise rate cut
    * Argentine bond risk spreads widen on possible default
    * Oil rebound buoys Colombian peso 
    * Latam stocks rise with stimulus measures in focus

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    April 22 (Reuters) - Brazil's real sank to a record low on
Wednesday, and Mexico's peso took no relief from an oil rebound
as increasing signs of economic distress from the coronavirus
outbreak spurred safe-haven bids for the U.S. dollar. 
    Returning after a day's holiday, the real plunged as
much as 1.7% to a record low of 5.4136 before cutting some
losses to trade at 5.4026. Data showed the country's March tax
revenue was its lowest in 10 years due to the pandemic.

    The currency, in tandem with the broader emerging market,
has faced continued outflows due to rampant risk aversion
prompting a safety rush to the dollar. 
    "Portfolio investments will remain under the pressure of the
risk-off global sentiment over the coming months, which will
keep the BRL under pressure through the rest of the year," wrote
TS Lombard economists Wilson Ferrarezi and Elizabeth Johnson.   
    They added that fiscal uncertainties continued to blur
Brazil's economic outlook due to concerns over the government's
ability to add new debt, as well as disparity over a bailout
package for state and municipal governments.
    A rebound in oil prices buoyed crude producer Colombia's
peso. Over the last two sessions, a collapse in crude
prices has pressured currencies of oil exporting countries such
as Russia's rouble and Mexico's peso.
    The latter, however, extended losses to a third
session after Mexico's central bank on Tuesday unexpectedly cut
borrowing costs by 50 basis points and unveiled a $31 billion
stimulus package in its most decisive move yet to combat the
virus.
    "Banxico's decision is less surprising when considering the
fast-deteriorating economic activity outlook, which contrasts
sharply with the relatively muted government reaction seen so
far," wrote Gustavo Rangel, chief Latam economist at ING.
    Credit Suisse analysts expect another 50-basis-point cut
next month, which would take the overnight rate to 5.5%. 
    The country's economy, already seen as weak before the
outbreak, is now pegged by the central bank to contract by more
than 5% in the first half of 2020.
    In Argentina, bonds fell and its country risk spread widened
as the market braced for the expected nonpayment of $500 million
in interest on government bonds, which would kick off a 30-day
grace period before default is declared.
    The rhetoric by Finance Minister Martin Guzman continues to
suggest that the government will probably not be very flexible
during upcoming negotiations, noted Credit Suisse analyst Juan
Lorenzo Maldonado. 
    Most regional stock indexes rose, in line with Wall Street,
supported by optimism over measures from the United States,
Mexico and South Africa to cushion the economic shock from the
coronavirus outbreak. Brazil's bovespa led gains, up 2%.

        
    Key Latin American stock indexes and currencies at 1901 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets     888.35     1.15
                                   
 MSCI LatAm               1618.89     0.65
                                   
 Brazil Bovespa          80664.86     2.14
                                   
 Mexico IPC              34320.54     1.26
                                   
 Chile IPSA               3693.88     1.12
                                   
 Argentina MerVal        30542.19    1.009
                                   
 Colombia COLCAP          1128.44    -0.25
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.4030    -1.60
                                   
 Mexico peso              24.5580    -0.67
                                   
 Chile peso                   857     0.18
                                   
 Colombia peso            4029.08     0.21
                                   
 Peru sol                  3.3708     0.41
                                   
 Argentina peso           66.2200    -0.20
 (interbank)                       
                                   
 
 (Reporting by Ambar Warrick in Bengaluru; editing by Jonathan
Oatis)
  
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