EM LATAM CREDIT: Tanure and the Braskem Bid - Neutral
(BRASKM; Ba3/BBneg/BB)
"Brazil’s Tanure in Talks W/ Banks for Braskem Bid: Reuters" - Bbg / Reuters
Not much news here other than confirming what we expected that billionaire businessman Nelson Tanure would talk to the banks holding Braskem shares as collateral for defaulted Odebrecht (a.k.a Novenor) loans.
Also as we posted in past days, it is envisioned that Petrobras would have an expanded role in decision making under a new shareholders agreement.
To the extent that this bid results in a major management overhaul to fix chronic underperformance, this could result in an improvement in the credit profile longer term and that does seem to be what Petrobras CEO Chambriard is pushing for as well but we are still early days.
I would think the banks would prefer a restructuring first, boost the stock price then possibly sell to Tanure at a higher price.
Braskem bonds have bounced in past days off the recent wide spread of T+616bps with 2034s last quoted T+573bps, possibly due to this possibility of a management shakeup after Chambriard's interview with Reuters last week where she sharply criticized management and complained of poor representation in Braskem decision making.
Please see our previous posts for more info on this evolving situation:
https://mni.marketnews.com/446OHNL
https://mni.marketnews.com/45jA1fh
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AUSSIE 3-YEAR TECHS: (M5) Within Range of Highs
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.610 @ 15:20 BST May 9
- SUP 1: 95.900 - Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures continue to circle just below recent contract highs, having cleared resistance on the continuation contract. The rally has taken out resistance at 96.730, the Sep 17 ‘24 high. On the downside, any reversal lower from current levels would signal a resumption of a downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.
FOREX: USD Up Against Safe Havens, A$, NZD Outperform On Trade Headlines
The early G10 tone is USD positive against the majors, albeit still in light liquidity conditions before all Asian markets get underway. There is focus on earlier news stories from US-China officials citing 'substantial progress' made from weekend trade talks held in Switzerland.
- AUD, NZD and CAD are all outperforming, although gains against the USD are modest at this stage and more prominent against the likes of yen. USD/JPY was last above 146.00, last near 146.20 (up nearly 0.60% from end Friday levels in NY).
- USD/CHF is tracking near 0.8350, up +0.40%. Both pairs are around multi week highs. EUR/USD was down to 1.1210/15 in latest dealings off 0.30%.
- AUD/USD was up a touch to 0.6420/25, NZD/USD near 0.5925, around 0.25% firmer.
- USD/CNH is down to 7.2250/55, around 0.20% stronger for the session so far in CNH terms. This pair remains within recent ranges though.
- Focus is now on details from the trade talks, with Reuters quoting US Trade Representative Greer that an agreement has been reached to lower the trade deficit. More details are expected from the US side on Monday, while Rtrs also noted China officials were expected to brief reporters Sunday evening Geneva time (although it is getting closer to midnight). A joint statement was also expected to be released per newswire reports.
US-CHINA: Officials State "Substanial Progress" From Weekend Trade Talks
Headlines have crossed from both the US and China sides on 'substantial progress' made in terms of trade talks held over the weekend in Switzerland.
BBG notes: "The US and China both reported “substantial progress” after two days of talks in Switzerland aimed at de-escalating a trade war, marking what Chinese Vice Premier He Lifeng called “an important first step” toward resolving differences." "While neither side immediately announced specific measures on Sunday, He said the world’s two biggest economies agreed to create a mechanism for further talks, led by US Treasury Secretary Scott Bessent and himself. Bessent said the US would share details on Monday and He promised a joint statement." see this link for more details.
Reuters stated: "U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer said on Sunday they reached a deal with China to cut the U.S. trade deficit, describing "substantial progress" in high-stakes talks with Chinese officials but offering no details as two days of negotiations concluded in Geneva." See this link.
- The market now awaits more details. Rrts noted that China officials were expected to talk to reporters later on Sunday evening Switzerland time.
