NEW YORK, Sept 4 (IFR) - LatAm credit markets were putting in a mixed performance on Friday following yet another round of outflows from EM and a weaker-than expected US jobs report.
EM debt funds saw the pace of outflows slow this week but not by much as another US$3bn exited the asset class.
“EM debt is still under big pressure and needs to stabilize before the asset class can attract a sustained bid,” said analysts at Bank of America Merrill Lynch.
The release of a lower than expected jobs number has also done little to remove the uncertainty over the possibility of a Fed rate lift-off in September.
“It is hard to convince anyone to step in with so much uncertainty at the moment,” said Klaus Spielkamp, head of fixed-income sales at Bulltick.
“I was hoping for a higher payrolls number so we could say the Fed will increase rates and we would get on with business, but we are in waiting mode again.”
Meanwhile, Brazilian assets remained under pressure, as they have all week long, amid growing nervousness about the weakening fundamentals of the region’s largest economy.
The sovereign’s benchmark 2025s were being quoted at around 90.86, hitting an all-time low in price terms, according to Thomson Reuters data. It is a similar story for Banco do Brasil 8.5% perps, which were being offered at around 96.00 today.
Oil company Petrobras’s curve was also another 20bp wider on Friday, with the 2023s being quoted at a wide bid-offer spread of 640bp-605bp.
Elsewhere, Chilean copper giant Codelco was enjoying a rare rally amid what one trader thought was a short squeeze on its bonds. Its 2022s, for instance, were trading at a spread of 218bp over US Treasuries, marking a 26bp tightening since August 26.
Meanwhile, the short-end of the Venezuela curve continued to catch a bid earlier this morning on rumors that the government was buying back debt on the cheap to reduce upcoming maturities.
The sovereign’s 2016s were being quoted earlier today as high as 84.75-85.75, advancing another two points from Thursday’s levels. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)