Petrobras (PBR, quote) issuing $11 billion in debt to set a record for an emerging markets debt offering. The company is using the opportunity of negative real rates in Brazil (officially no, but in terms of true cost of living, YES), and most of the world to tap a global debt market starving for yield.
In a topic which could be discussed at great length beyond this forum, I would at least like to sketch the surface of a concept I think many investors (including me) are having trouble with.
We continue to see a powerful breakout in Brazil and with net short Ibovespa futures >$3.5B there is room for additional move.
First outflow in 24 weeks would seem to be the headline but more importantly it should be why didn’t the 23 weeks in a row take emerging markets higher?
The Brazilian real dropped to a three-year low last week as President Rousseff and other officials stepped up their public campaign to keep the currency weak. President Rousseff pronounced the currency as, “overvalued,” just a weeks after Central Bank President Tombini promised low rates for a, “prolonged time.”
While the Peso has strengthened back below its 200 day MA, it remains in a well defined trend channel from the October low and resistance comes in multiple ways down to 12.98.