Brazil

Brazil and Standard & Poor’s rating actions have a peculiar relationship. In March 2014, S&P downgraded the sovereign to BBB- but the bond market subsequently rallied as the rating agency offered a stable — rather than negative — outlook.

Fitch removed the positive outlook from privately owned Brazilian bank BTG Pactual’s ratings on Monday, saying the deterioration in the operating environment in Brazil outweighed the positive effects of the acquisition of Swiss private bank BSI.

Credit default swaps referencing Brazil have hit their widest levels of the year, with the continuing crash in commodities weighing heavily on those names most exposed and adding to a raft of other woes for the country.

Brazilian credits had yet another tough day on Friday to complete a torrid week for the country in bond markets. The rough ride has put at least one issuer off of coming to market.

A torrid week in secondary markets for Brazilian credits meant that no bankers were surprised that industrial conglomerate Cosan opted not to issue on Thursday having completed investor meetings on Wednesday ahead of a planned 144A/Reg S deal.

Industrial conglomerate Cosan looks set to provide the toughest test of investor appetite for Brazilian credit risk since Petrobras published its delayed 2014 financials results in April.

Banco Mercantil do Brasil extended the settlement date for a buyback of its 2020 dollar denominated subordinated debt this week, because it has not yet received central bank approval to increase the amount it can purchase.

In this round-up, Hong Kong deposits rose in April, but cross-border RMB trade settlement fell, Macau announced its March deposit figures, ICBC opened two new offshore branches in Montreal and Riyadh, RMB clearing in South Korea has reached a daily average of Rmb25bn, and Japanese bank MUFG helped Brazilian clients settle trade with China in RMB.

With hopes high among debt bankers that Brazil could become a core source of green bond issues, BR Foods (BRF) sold the first environmentally friend bond from the country last Friday.

Brazilian food group BRF sold its debut euro denominated note around 25bp wide of its dollar curve on Friday with a green bond issue that DCM bankers said was an impressive result for an inaugural deal in the currency.