2000-02-10 Debt price rally

Daily Brady Bond Trading Commentary

Thursday February 10, 2000 

Emerging markets debt prices continue to rally, and last week's ratings announcement regarding Mexico is still a driving force.

An actual upgrade by Moody's in the near future would lead to further tightening of Mexican debt (a split rating should drive credit spreads easily inside of 225 bps, and quite possibly inside of 200). In the less likely case that Moody's does not follow through on its upgrade review, the market would be caught off guard, to say the least.

Sustaining the recent trend of positive announcements, Standard & Poor's raised its outlook on Argentina (BB) to stable from negative. Momentum still favors playing from the long side, though we expect to see profit-taking keep the upside limited.

Contributed by

Credit Lyonnais Securities (USA) Inc.

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