Peru improves; Ukraine eyed; Brazil remains tumultuous, but CDS tighten; EM trading slow

By Christine Van Dusen

Atlanta, March 28 – Bonds from Peru opened a touch stronger and Mexico’s Cemex SAB de CV saw a little bit of activity on an otherwise slow Easter Monday morning for emerging markets assets.

Peru’s notes opened “with a slightly better tone than where we left off last week,” a New York-based trader said. “Extremely quiet so far, as you can assume. Only a few trades in Latin America.”

Meanwhile, tumult continued in Brazil, where the likelihood of an impeachment for President Dilma Rousseff seemed to be increasing.

“It could become a positive trigger for the market,” according to a report from Schildershoven Finance BV.

By the end of the day, Latin American credit was higher and tighter, though volumes remained low, a New York-based trader said.

Brazil’s five-year credit default swaps spreads closed at 382 basis points from 397 bps, while Mexico’s moved to 166 bps from 171 bps.

“Cash prices finish mixed, with some curves higher, whereas others are actually lower, despite spread tightening in the CDS world,” he said. “Latin American high yield finishes higher on the day, with both Venezuela and Argentina firmer.”

Looking to Ukraine, bonds are expected to react negatively to the news that Ukrainian Parliament Speaker Volodymyr Hroisman will head the new government, Schildershoven said.

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