Risk-Off Sentiment Poses Downside Risks for LatAm Corps: Lucror
(Bloomberg) -- Extended risk-off market sentiment would increase downside risks for higher beta corporate bond issuers in Latin America, Lucror Analytics analysts led by Sebastian Hofmeister wrote in a note.
Lucror cites the change in market sentiment following a dovish Fed statement and renewed fears of a second wave of Covid-19 cases in the US
Sees risk of increase in infection rates leading to return to stricter lockdown measures in US
“Depending on the actual severity of such measures, this could slow the pace of economic recovery and keep a lid on oil prices, impacting market sentiment,” Hofmeister wrote
Under adverse scenario, sees most downside risk in following credits, most of which are higher beta:
Grupo Aeromexico SAB, Andrade Gutierrez, Atento SA, Volcan, Grupo Embotellador Atic SA, Azul SA, Camposol SA, Cia General De Combustibles SA, Cia Siderurgica Nacional SA, Ecopetrol SA (mainly ECOPET ‘30s), Elementia SAB, Frontera Energy Corp., Gol Linhas Aereas Inteligentes SA, Gran Tierra Energy Inc., InterCement SA, IRSA Propiedades Comerciales SA, Oi SA, Unigel SA
Any forthcoming correction expected to be more moderate than the February/March crash on US reluctance to return to strict lockdowns and market optimism on coronavirus vaccine
To contact the reporter on this story: Ezra Fieser in Bogota at efieser@bloomberg.net