EMERGING MARKETS-Latam currencies firm; Venezuela bonds rally

Tue Dec 11, 2012 4:40pm EST

* Venezuelan 2027 bond hits highest price since January 2008
    * Chile peso up again, some see cenbank intervening
    * Mexico peso up 0.5 pct, Brazil real flat

    By Walter Brandimarte
    RIO DE JANEIRO, Dec 11 (Reuters) - Venezuelan bonds rallied
for a second session on Tuesday on expectations of a regime
change in the oil-exporting nation, while Latin American
currencies rose as German data on investor confidence and hopes
of a U.S. budget deal supported appetite for risk.
    Venezuela's global 2027 bonds, the most
actively traded, reached their highest price since early 2008 as
President Hugo Chavez underwent surgery in Cuba for a cancer
recurrence, raising the prospect of new presidential elections,
even as Chavez named a successor.
    The 2027 bonds last traded 1.4 points higher at a bid price
of 102.367. 
    Yield spreads between Venezuelan bonds and safe-haven U.S.
Treasuries tightened 3 basis points to 749 basis points
according to JPMorgan's EMBI+ index, showing investors'
appetite for the country's assets was the strongest since
September 2008.
    Before leaving Venezuela, Chavez named his vice president
and foreign minister, Nicolas Maduro, to take over, should he
become incapacitated. Chavez, who is due to begin a new six-year
term on Jan. 10, urged supporters to vote for Maduro in the
event of an election.
    "We are encouraged that President Chavez asked for voter
support for his candidate since this suggests an electoral
transition as opposed to the alternative strategy to allow the
VP to finish the entire six-year term," Siobhan Morden, head of
Latin America strategy at Jefferies & Co. Inc., wrote in a
research note.
    
    CURRENCIES GAIN, EXCEPT REAL
    Elsewhere in Latin America, most currencies rose after a key
index of German investor sentiment rose sharply in December,
supporting optimism about the world economy.
    The appetite for risk further grew as the S&P 500 index
 ended at its best level since Election Day, buoyed by
hopes of a resolution to the U.S. budget impasse.
    The Mexican peso rose 0.5 percent to 12.7435 per
dollar, while the Chilean peso edged 0.1 percent higher
to 475.00 per greenback, its strongest level in nearly two
months.
    It was the sixth straight winning session for the Chilean
peso, which led some traders to believe the country's central
bank could soon act to curb currency gains.
    On the other hand, the Brazilian real  closed
practically unchanged at 2.0770 per dollar after the central
bank announced two auctions on Wednesday to sell as much as $1.5
billion on the spot market with repurchase agreement.
 
    The announcement added to the market perception that
Brazilian policymakers do not want the real to weaken.
Confirming that perception, a member of Brazil's economic team
said the real was at a satisfactory level when it traded around
2.03 and 2.04 reais per dollar. 

    Latin American FX prices at 2121 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                2.0770    -0.01   -10.09
                                             
 Mexico peso               12.7435     0.51     9.62
                                             
 Argentina peso*            6.4200     0.47   -26.32
                                             
 Chile peso               475.0000     0.11     9.33
                                             
 Colombia peso          1,800.5000    -0.08     7.66
                                             
 Peru sol                   2.5710     0.00     4.90
                                             
 * Argentine peso's rate between                    
 brokerages
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