NEW YORK, Sept 30 (IFR) – Bonds issued by troubled state-run Brazilian oil company Petrobras were enjoying a rare rally on Wednesday following news that it would raise local gasoline and diesel prices.

Petrobras’s debt prices jumped between 1.5 and 3.5 points as investors cheered a move that will help improve cashflow at one of the world’s most indebted companies.

“This is the first positive news we have seen out of Brazil for some time,” said a broker. “So there has been a decent amount of buying and short covering.”

The 2019s were up about 3.5 points at 72.50-73.50, the 2024s up 1.5 points at 72.00-73.00 and the 2044s up three points at 65.50-66.50.

Today’s move was seen a positive sign from a government that has long held back on hiking local fuel prices as it seeks to keep a cap on inflation.

The improved tone spilled over into the broader Brazilian market, where the sovereign’s five-year CDS hit a tight of 470bp-480bp, snapping back from a wide of 570bp seen on Monday. (Reporting by Paul Kilby; Editing by Marc Carnegie)