NEW YORK, Feb 20 (IFR) - Latin American corporate bonds stood firm on Friday against a back-up in US Treasuries which reversed earlier gains on news that euro-zone creditors had agreed in principle to extend Greece’s bailout package.
Light supply in the primary market and robust inflows into hard-currency emerging market funds have helped to push prices higher this week.
“Today we decoupled from weak commodities, and this morning with the rally in US Treasuries the market was just on steroids,” said a corporate bond trader in New York.
Coroporate bonds remained well bid even as US Treasuries reversed gains in the afternoon, with the yield on the 10-year note rising back to 2.10% from as tight as 2.04.
“Credit is still very well bid and cash (bonds) are outperforming credit default swaps,” said the trader.
Corporate bonds in Colombia were among the outperformers, having tightened as much as 10bp on the day, followed by corporates in Chile and Mexico, which ended 7bp and 5bp tighter respectively.
Among the most recent issues, Chilean retailer Cencosud’s 2025 were ending the week at 100.875-101.125, while the 2045s were spotted at 99.875-99.125.
“US real money (investors) are buying, and we have local demand and European demand,” said the trader.
Elsewhere in the region, bonds issued by Brazilian state-run oil company Petrobras took back some earlier gains, as accounts opted to take profits amid fears of an imminent downgrade by Moody‘s.
Moody’s downgraded Petrobras to Baa3 on January 29, warning that a demotion to junk territory could soon become a reality if the company failed to make “clear progress towards normal production of financial statements” over the coming month.
The company’s 2024s were ending the week at a spread of 530bp-520bp, or some 10bp wider on the day.
Among high-yielding names, Venezuelan bonds ended the week between a quarter and a full point lower, as dealers unloaded long positions. Local accounts, however, remained net buyers, according to a broker in New York.
Venezuela’s 2022s, for example, closed at 47.25-48.25, down a quarter point on the day, while PDVSA’s 8.5% were spotted at 63.50-64.50, down one point.
Mexican media company TV Azteca is bringing 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.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale that could take place as early as this month.
Panama filed with the SEC to sell up to US$3.04bn in debt, raising expectations that the sovereign could soon come to the international bond market.
Bankers have been awaiting a mandate decision from the sovereign, which sent out request for proposals earlier this month.
Reporting by Davide Scigliuzzo; Editing by Paul Kilby