Mexican assets steady after budget; Argentine bonds rise after rating upgrade
Moody's downgrades Mexico outlook to negative
Peru's economy grows for sixth straight month in September
El Salvador launches $1 bln bonds with 12% yield
MSCI Latam stocks off 0.5%, FX index flat
Updated at 2022 GMT
By Johann M Cherian
Nov 15 (Reuters) -Most Latin American currencies and stocks were subdued on Friday, withinvestors assessing Mexico's budget proposal for the upcoming year, while Argentine hard-currency bonds got a lift following a credit ratings upgrade by Fitch.
Mexico's peso MXN= see-sawed between marginal gains and losses near 20.36 to the dollar, and the yield on 10-year sovereign bonds MX10YT=RR ticked up 4 basis points as markets parsed the country's proposal to narrow its fiscal deficit to 3.9% of gross domestic product in 2025.
The finance minister also expects Latin America's second-largest economy to grow between 2% and 3% next year, higher than the International Monetary Fund's forecast of 1.3%.
Late on Thursday, ratings agency Moody's downgraded the country's outlook to negative, citing a widening fiscal deficit and recent controversial judicial reforms.
The peso has depreciated over 16% this year as markets priced in institutional risks in the government and that U.S. President-elect Donald Trump's policies against Mexico could weigh on the economy.
"It's likely that countries across the region will come under increased pressure from the U.S. to clamp down on Chinese investment and influence in their countries. This is especially the case for Mexico given accusations that China is using it as a base to circumvent U.S. tariffs," said Kimberley Sperrfechter, an emerging markets economist at Capital Economics.
More broadly, MSCI's index tracking currencies in Latin America .MILA00000CUS was little changed and was on track for modest declines for the week. The U.S. dollar was hovering near a one-year high and was on track for its biggest weekly jump in over a month.
Peru's sol PEN= dipped 0.2%. The copper exporter'seconomy expanded on an annual basis for the sixth straight month in September,garnering praise from IMF officials on the sidelines of theAsia-Pacific Economic Cooperation summit.
Copper exporter Chile's peso CLP= dipped 0.4%,while Colombia's peso COP= strengthened 1%.
Argentine bonds AR217736366=, 040114HS2= advanced after Fitch Ratingsupgraded the country's long-term issuer default rating to "CCC" from "CC," indicating increased confidence in the country's ability to make upcoming foreign-currency bond payments.
Economic fundamentals in the inflation-ridden country have broadly shown signs of improvement under President Javier Milei's austerity measures.
On the equities side, MSCI's index tracking Latam stocks .MILA00000PUS slipped 0.5%, withMexican equities climbing0.2%.
As part of the budget proposal, Mexico expects to transfer $6.69 billion to state oil producer Pemex next year to help the heavily indebted firmmeet its debt and loan repayments.
El Salvador issued $1 billion worth of six-year bonds at a yield of 12%. The country's hard-currency bond USP01012CF16=, <283875CE0=>maturing in 2030 trended higher.
Markets in Brazil were shut for a public holiday ahead of a Group of 20 top economies summit next week.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1085 | 0.05 |
MSCI LatAm .MILA00000PUS | 2076.99 | -0.52 |
Brazil Bovespa .BVSP | 127791.6 | 0.05 |
Mexico IPC .MXX | 50421.36 | -0.26 |
Chile IPSA .SPIPSA | 6527.02 | 0.74 |
Argentina Merval .MERV | 2068870.3 | -0.899 |
Colombia COLCAP .COLCAP | 1344.95 | -0.2 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.7947 | -0.1 |
Mexico peso MXN= | 20.3689 | 0.16 |
Chile peso CLP= | 979.41 | -0.37 |
Colombia peso COP= | 4431.88 | 1.02 |
Peru sol PEN= | 3.8 | -0.18 |
Argentina peso (interbank) ARS=RASL | 998 | 0.05 |
Argentina peso (parallel) ARSB= | 1120 | 1.75 |
Reporting by Johann M Cherian in Bengaluru
Editing by Marguerita Choy
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