EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (19 May)

Source: BBG

Measure Level Δ DoD
5yr UST 4.06% -3bp
10yr UST 4.46% -2bp
5s-10s UST 39.2 +1bp
WTI Crude 62.4 -0.1
Gold 3234 +30.3

Bonds (CBBT) Z-Sprd Δ DoD
ARGENT 3 1/2 07/09/41 858bp -17bp
BRAZIL 6 1/8 03/15/34 260bp +2bp
BRAZIL 7 1/8 05/13/54 371bp +7bp
COLOM 8 11/14/35 415bp +3bp
COLOM 8 3/8 11/07/54 505bp +3bp
ELSALV 7.65 06/15/35 421bp +6bp

MEX 6 7/8 05/13/37 273bp +1bp
MEX 7 3/8 05/13/55 337bp +5bp
CHILE 5.65 01/13/37 155bp +3bp
PANAMA 6.4 02/14/35 314bp -6bp

CSNABZ 5 7/8 04/08/32 559bp +6bp
MRFGBZ 3.95 01/29/31 256bp +2bp
PEMEX 7.69 01/23/50 630bp +1bp
CDEL 6.33 01/13/35 204bp +6bp
SUZANO 3 1/8 01/15/32 215bp +8bp

FX Level Δ DoD
USDBRL 5.65 -0.02
USDCLP 939.47 -3.31
USDMXN 19.3 -0.14
USDCOP 4173.15 -3.85
USDPEN 3.69 +0.00

CDS Level Δ DoD
Mexico 120 (0)
Brazil 166 (1)
Colombia 226 (1)
Chile 56 0
CDX EM 96.94 (0.03)
CDX EM IG 100.93 (0.02)
CDX EM HY 92.88 (0.05)

Main stories recap:

Comments

·        U.S. Treasury yields closed 2 bps lower today and U.S. stock indexes were little changed despite the Moody’s downgrade of the U.S. sovereign rating to Aa1 as President Trump reported progress with Russia in seeking an end to the war with Ukraine.

·        EM Asia benchmark bond spreads widened about 6bps while investors fretted the U.S. Moody’s downgrade but as we rolled into CEEMEA trading the market stabilized with spreads mixed, mostly in a -5/+15 bps range.

·        The EM CEEMEA primary market was active with six new mandates. LATAM also heated up with two new mandates from Argentine issuers.

·        LATAM secondary market benchmark spreads were mixed with low beta Mex and Chile sovereign bonds about 3 bps wider while Brazil corporate bonds were 6-8 bps wider.

·        Argentina bonds outperformed with spreads on most bonds 15-20 bps tighter as the representative of President Milei’s political party La Libertad Avanza won the City of Buenos Aires election, signaling support for the government’s policies.