NEW YORK, Feb 27 (IFR) - Latin American credits ended the week in better shape, with sovereign and corporate bonds enjoying a strong bid as accounts continued to see value in battered Brazilian names.
Bonds spreads of Brazilian state-run oil company Petrobras tightened by 20bp on average Friday, with the 2024s closing at around 545bp and the 2044s quoted at around 550bp, according to a New York-based trader.
The notes have been slowly recovering since late Tuesday, when the company's rating was downgraded to junk by Moody's, but they are still some 20bp wide to their pre-downgrade levels.
"I think the market over reacted (to the downgrade)," said the trader. "But we are going to see volatility and we are far away from the problem being solved."
Iron-ore producer Vale also saw better buyers on its bonds, in spite of posting full-year net income well below analyst forecasts on Thursday. Short covering helped support prices, said the trader.
Vale's 2022s and 2042s were seen closing some 15bp tighter at spreads of 280bp and 385bp respectively.
Among high-yielding credits, a new 2025s issue by Mexican cement company Cemex were up nearly a point after trading down in the grey market on Thursday, according to a second bond trader. He had the notes quoted at 100.75-100.90 at the close, up from a reoffer price of 99.98.
Meanwhile, primary activity is expected to remain relatively busy next week, with America Movil and Costa Rica both preparing bond sales.
The Mexican telecom is expected to reopen its Global peso-denominated bond due 2024 for up to MXN7.5bn (US$502.5m), according to a Moody's note.
Proceeds form the sale will be used primarily for debt refinancing as well as for general corporate purposes, Moody's said.
Mexican telco America Movil is meeting investors in Europe and the US this week as it seeks to market a global peso trade through BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley.
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.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale.
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.
Reporting by Davide Scigliuzzo; Editing by Paul Kilby