July 28, 2015
New bond sales look tougher as yields widen and LatAm currencies fall
Deals looked increasingly difficult as bond yields gapped out on Monday. Cash prices on 10-yield sovereign bonds from Brazil, Peru and Panama were seen trading around 25bp wider than last week’s levels. That came as yields on US Treasuries fell to 2.23%, their lowest level in almost three weeks, signaling a flight to safety.
“Everything is bad. It started with the China number overnight,” said a debt capital markets source, referring to an 8% drop in the Shanghai stock index on Monday. Companies connected to the Lava Jato corruption scandal were trading wider by 25bp to 100bp on Monday, he added: “It’s nothing new, but now people are just saying ‘get me out’.”
“The Brazil story is just dragging all the Brazilian credits lower,” said a London-based bond banker, adding that a lack of liquidity will likely deter any borrower from issuing in the market in the coming weeks. LF