Brazilian credits held steady Friday as the rest of the region watched spreads widen after a robust US jobs report sparked a sell-off in Treasuries and equities. The yield on 10-year US Treasuries widened by nearly 14bp on Friday to 2.245%, its highest level so far this year, as traders increased bets that the Fed might start raising interest rates this summer.
In a twist on previous sessions, Brazilian credits proved to be the outperformer Friday after short covering helped prop up prices on certain names despite the broader sell-off.
"The most interesting thing is that despite the move in rates, Brazil bond spreads didn't widen much," said a sovereign bond trader in New York.
"The market is very technical and there is probably a decent short in Brazilian bonds."
Brazil's sovereign notes ended the session little changed in price, with the 2025s last quoted at around 95.50-96.00. Its five-year credit default swaps, however, were ending the day 5bp-6bp wider at 258bp, according to the trader.
Mexico, on the other hand, bore the brunt of the slide in Treasuries and became the day's clear underperformer.
Its curve was ending between 10bp and 15bp wider in spread terms, while five-year CDS was 8bp wider at 118bp.
It was a similar story among corporate credits, with Petrobras bonds closing between 2bp wider and 4bp tighter. Mexico's Pemex, on the other hand, underperformed to close between 7bp and 15bp wider on the day.
"Pemex is suffering more than Petrobras because (it trades at a) closer spread to the sovereign," said a corporate bond trader in New York.
Its 2026s slid 2 points to close at 99.25, while the 2046s fared even worse, plunging 3.5 points to 97.25.
In Colombia, bonds of state-run Ecopetrol closed 4bp tighter in spread terms after the company announced the appointment of former Finance Minister Juan Carlos Echeverry as its new chief executive.
Colombia's bonds and CDS contracts were also better bid, closing 5bp tighter in price.
Peruvian state-controlled mortgage bank Fondo Mivivienda, rated BBB+ from both S&P and Fitch, has mandated Deutsche Bank and J. P Morgan to organise a series of fixed-income investor meetings in Europe starting in London on Wednesday.
The borrower will move on to Amsterdam on Thursday and Paris on Friday, and the following week it will meet investors in Frankfurt on March 16.
Mexican media company TV Azteca is bringing to market a rare project bond related to the development of the Andean country's fiber optic network.
Panama has filed with the SEC to sell up to US $3.04bn in debt, raising expectations that the sovereign could soon come to the international bond market.