2000-02-25 Thin volumes

Daily Brady Bond Trading Commentary

Friday February 25, 2000 

Though volumes were thin and trading choppy this week, the credit spreads for the four major Latins tightened as many assets finished at or near their highs for the year.

Yields came in at the front end of the U.S. Treasury curve, relieving the market of its worst FOMC-related fears for the moment. Brazil's government announced a 7% rise in petroleum prices at the refinery level, but the increase was not as large as some had feared and will not significantly impact inflation expectations in the near term.

The success of Brazil's 30-year issue, with the help of some cross-over buying, and anticipation of debt buybacks from any of a number of Latin issuers could push EM debt toward further gains next week. Demand remains strong for longer dated globals in Mexico and Argentina.

We also still see value in Mexican Discounts and Pars and in Brazilian Bradys and globals, which offer an attractive pick-up (150-170 bps at the long end of the global curve) versus those of Argentina.

Contributed by

Credit Lyonnais Securities (USA) Inc.

This report was prepared by Credit Lyonnais Securities (USA) Inc. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Returns set forth in this report are estimates based on internal assumptions, and any changes in these assumptions may have material impact on such estimated returns. This is not a solicitation or any offer to buy or sell securities. We, our affiliates, and any officer, director or stockholder or any member of their families, may have a position in and may from time to time purchase or sell any of the above mentioned or related securities.