Trading quiet ahead of Brexit vote; Lat-Am spreads narrow a touch; Arcor plans issuance

By Christine Van Dusen

Atlanta, June 22 – Latin American bonds tightened slightly on a quiet Wednesday after Federal Reserve Chair Janet Yellen’s comments – advocating a cautious approach to rising rates – and ahead of Thursday’s vote on whether or not the United Kingdom will stay in the European Union.

Also impacting the big picture was Tuesday’s news that the European Union is likely to extend sanctions on Russia for six more months.

“Despite the uncertain outcome in tomorrow’s referendum, general market sentiment remains resilient,” a London-based strategist said.

But trading was “a little subdued,” a London-based trader said.

Latin American credit managed to finish the day slightly tighter and higher but well off the best levels of the session, a New York-based trader said.

“Equity and oil reversal had spreads and cash prices moving back towards yesterday’s close,” he said.

Five-year credit default swaps spreads for Brazil closed at 327 basis points from 328 bps after trading as tight as 324 bps earlier in the day, he said, and Mexico’s CDS closed at 163 bps from 166 bps.

“Cash prices finish mixed, with Brazil and Mexico outperforming peers,” he said. “Latin American high yield finishes firmer on the day, with Venezuela and Argentina higher.”

In deal-related news, Argentina-based candy-maker Arcor SAIC announced plans to issue notes alongside a tender offer.

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