Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Brazilian assets sold-off across the board after President Bolsonaro ousted Petrobras’ CEO Roberto Castello Branco. Market participants worry that this would lead to the government now meddling with policies. The Bovespa Index was down 4.9%, the most since April 2020 and the USD/BRL breached 5.5, down almost 2.7% before the central bank intervened and the currency closed at 5.46. Petrobras shares were down 22% and their bonds were also hurt – their USD 5.75% 2029s were down 4.2 to 111.3, yielding 4.07%, USD 6.9% 2049s were down 5.4 to 111.55, yielding 6.04% and their 6.85% century bonds due 2115 fell 4.3 to 109.5, yielding 6.25%.

The nation’s sovereign bonds also saw a sell-off with their 4.5% 2029s down 2.3 to 107.4, yielding 3.4% while their 8.25% 2034s fell 4.4 to 135.08, yielding 4.61%. Brazil’s CDS spreads also widened 22bp to 187bp, its biggest jump since September.

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