PDVSA and Petrobras outperform in weak session
By Davide Scigliuzzo
NEW YORK, Feb 9 (IFR) - Brazilian state-owned Petrobras and Venezuela bucked the trend in an otherwise weaker Latin American credit market Monday as rebounding oil prices provided support for oil names.
However, most of the Brazilian corporate space suffered steep losses amid continued concerns over a widening investigation into corruption at Petrobras and at a number of its contractors.
After beginning the session wider in spread terms, Petrobras 2024s ended some 3bp tighter at 550bp-545bp. "Petrobras is now closing tighter, but I think mostly on oil," said a corporate bond trader in New York.
Meanwhile, selling in perps issued by state-controlled Banco do Brasil continued to drag the country's banking credits lower.
Banco do Brasil's 9% perpetual note was quoted at a cash price of around 81 at the close, down two points on the day after losing another four points on Friday, said the trader.
Commodity-related names were also being hit, with miner Vale's 2022s ending 5bp wider at 303bp-297bp.
Elsewhere in the region, Venezuela received a boost from higher oil prices and the completion of a US$2.8bn financing package at state-owned PDVSA's US unit Citgo. Investors largely shrugged off S&P's one-notch downgrade of the sovereign to CCC.
Citgo's financing deal, whose proceeds go to PDVSA, included a US$1.5bn five-year bond priced at 95.071 to yield 12% and a 3.5-year term loan, closed at a spread of 850bp over Libor. Continuación...