LATAMNEWS: AA2000 Is Most Vulnerable LatAm Corp Issuer: Lucror Analytics


(Bloomberg) -- Petroleos Mexicanos, YPF SA, and Petroleo Brasileiro SA led a sharp fall in Latin American energy bonds Monday as the effects of an oil price crash and fears of the impact of coronavirus ripped through global corporate debt markets.

“Avoid oil companies, which basically means all of Pemex, YPF and Petrobras,” says Guido Chamorro, co-head of emerging hard-currency debt at Pictet Asset Management in London “I would not buy a single name in Latin America that is exposed to oil for

Mexico’s Pemex notes due 2027 fell 10 cents on the dollar to around 94 cents, lowest in a year

Argentina’s YPF bonds due 2027 fell 13 cents to around 70 cents, lowest since September; yields rose to 17.35%

Brazil’s Petrobras notes maturing 2027 were down 8 cents to around 117 cents

Lucror Analytics says Latin American oil and gas producers, airlines, and companies exposed to cyclical sectors are among most vulnerable to effects of continued spread of COVID-19

“The names affected are primarily those in industries that would be disproportionately affected if the outbreak were to worsen, as well as some with weaker credit profiles for which upside to valuations has diminished in the current market context,” said Soummo Mukherjee, a senior credit analyst at Lucror

”What’s always fascinating to see on days like this is whether bonds are actually dropping - meaning are investors really selling - or is the market just pricing bonds down, which so far seems to be the case today for Latam corporates,” said Roger Horn, a senior emerging-markets strategist at SMBC Nikko Securities America in New York

“The market is throwing out very low bids to see if anything sticks but investors don’t want to sell at ridiculous prices”

By Ezra Fieser and Pablo Gonzalez