Brazil

Banco do Estado do Rio Grande do Sul (Banrisul) has become the third Brazilian lender to launch a tender offer for existing debt as bond prices in the country hit lows.

The downgrade of Brazil by Standard & Poor’s into sub-investment grade territory on Wednesday had been seen as inevitable for nearly two months. But when it came, the downgrade was as brutal as it could have been.

Brazil’s downgrade to junk will come as little surprise to market observers, given the increasingly bearish sentiment seen in Brazilian sovereign bonds.

Standard & Poor’s put the Brazilian sovereign into sub-investment grade territory late on Wednesday in a move that came sooner than most had expected but had already been accepted as inevitable.

General Shopping Brasil has exercised its right to defer the payment of interest on its $150m 12% perpetual subordinated notes, meeting the expectations of credit analysts.

Brazilian low-cost airline Gol Linhas Aereas Inteligentes became the latest high yield issuer from Latin America to be downgraded on Monday as recession in the region’s largest economy hit passenger demand.

The brutal sell-off that afflicted Brazilian bonds in July appears to have slowed somewhat amid the low trading volumes of August, though economic bad news and political troubles show no sign of abating.

Banco ABC Brasil, a subsidiary of Arab Banking Corp (Bank ABC), has closed syndication for its $150m two year loan, increasing the deal to $200m.

South Africa is experiencing a difficult week in credit markets, with credit default swaps that reference its debt hitting their widest point for two years.

Brazilian refractories and minerals producer Magnesita Refratarios will buy back over three quarters of its outstanding bonds after a tender expired at the end of last week.

Whether prices in Brazilian bonds really have found a floor or not, several bond investors say they are now finding value in the country’s debt markets after a sustained sell-off was halted by a better-than-expected downgrade from Moody’s this week.

Ukraine’s sovereign debt restructuring, Argentinian primary elections and a potential Turkish coalition government are keeping debt bankers alert while the primary bond market takes its summer break.