NEW YORK, Feb 6 (IFR) - Latin American credits were headed for a mixed close on Friday, with Brazilian names underperforming while the rest of the region held up in price despite the widening in US Treasuries.
“Brazilian corporate and sovereign bonds are somewhat under pressure today and we are seeing better sellers of quite a few bonds,” said a trader in New York. “Other markets are holding in better.”
Brazil’s five-year credit default swaps were ending the session 4bp to 5bp wider, while protection on Mexico and Colombia was flat to 1bp tighter on the day.
Petrobras shares tanked more than 8% and its bonds widened after Brazilian President Dilma Rousseff tapped Aldemir Bendine, the chief of state-run Banco do Brasil, to be the new CEO of the embattled oil giant.
The Petrobras board confirmed him in the job over the objection of non-government board members.
The company’s 2024 bonds were seen closing some 10bp-15bp wider on the day at a spread of around 550bp, with the market reacting negatively to the appointment.
“He is someone close to (Rousseff’s party). And who is going to manage the bad news as it comes out? Not someone who is going there to clean up the company,” said the trader.
“You also have to question why a senior banker is going to be the best person to lead an oil company.”
Bankers in the region have got used to the uptick in volatility, and new deals over the coming weeks will have to be timed carefully.
In addition to the latest twists in the Petrobras saga, market participants will keep a close eye on swings in oil prices as well as the evolution of the standoff between Greece and European lenders.
“Things are really volatile these days, yields have moved a lot and it is hard to price (deals),” said a syndicate banker in New York.
Venezuela’s US oil refiner Citgo Holding was forced to amend the terms Friday and raise the yield on a proposed US$2.5bn financing package following lackluster investor demand, a source familiar with the deal told IFR.
The transaction, which comprises a US$1.5bn bond and a US$1bn loan aimed at distributing a dividend to Venezuelan state-owned company PDVSA, is now expected to price as early as Monday.
The City of Buenos Aires has announced a series of investor meetings ahead of a potential 144A/Reg S bond issue. Bank of America Merrill Lynch, HSBC and JP Morgan are the lead managers on the potential transaction.
After meeting investors in London and New York on Friday, official will head to Boston and Los Angeles on Monday, and back to New York on Tuesday.
Grupo Senda Autotransporte, a Mexican bus transportation company, has wrapped up investor meetings ahead of a possible USD 144A/Reg S bond offering. Expected ratings are B/B by S&P and Fitch. Credit Suisse and JP Morgan have been mandated as active bookrunners, while BBVA will act as passive bookrunner.
Mexican media company TV Azteca will offer a small group of investors the opportunity to buy Peruvian sovereign risk with a spread, as it brings to market a rare project bond related to the development of the Andean country’s fiber optic network. Pricing is expected toward the end of February.
Bankers are awaiting a mandate decision on an up to USD1bn 144A/Reg S bond offering from Costa Rica after the sovereign sent out a request for proposals last month. (Reporting by Davide Scigliuzzo; Editing by Shankar Ramakrishnan and Marc Carnegie)