CDS: Mexico To Move Inside Brazil

Regular readers of the Latin America Daily Financial Alert will be familiar with our bearish stance on Brazil's US dollar debt. Since initiating our bearish US$ Global 2027 position in our Key Market Views portfolio on January 26, we have seen implied gains of 2.5%, and continue to target a price level of 140.00 on the bond. The view is underpinned by our belief that considerable fiscal uncertainty is not fully priced into the bond market, while Brazil's robust economic performance in the latter stages of 2009, along with the positive outlook for 2010, have already been factored into yields, which hit a record low at the start of the year.

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