Most bond spreads between Quasi-credits and corresponding Sovereigns have widened during January, albeit from some of the tightest levels in a year. We believe this spread widening offers an opportunity to add positions in Quasi-bonds. We maintain the view that stable spreads and the expectation of some spread compression make Quasi-bonds attractive. We find that for most Quasi-bond curves, the 10Y area offers better value in relative terms and note the better liquidity some of those bonds offer. Below is a summary of our views:
- PEMEX: We favour front-dated bonds up to 5Y maturities, like 27s, 28s, 29Ns, and 31s
- PETBRA: PETBRA 35s look relatively cheap on the curve and have a healthy level of liquidity
- ECOPET: ECOPET 36s offer a good pick-up over other cheap bonds like 30s
- CDEL: We prefer CDEL 36Ns