Paraguay preps bond tap in buoyant market
By Paul Kilby
NEW YORK, April 24 (IFR) - Latin American credits were enjoying some spillover Friday from the euphoric response to yesterday's release of full-year results from Brazilian oil company Petrobras.
Stronger oil prices and rallying equity markets were also providing support for the region, where Paraguay is making an opportunistic US$280m tap of its 2023s today.
"Everyone is reconsidering their position now that Brazil isn't such a big risk any more," said Klaus Spielkamp, head of fixed-income sales at Bulltick. "It is a better environment."
New Petrobras management told investors yesterday about its strategy to cut debt and sell core assets as it seeks to address concerns about the company's rising leverage.
Fitch removed Petrobras from rating watch negative and affirmed its BBB- rating today, saying release of the financials averted a covenant violation and acceleration on its debt.
Spreads on the oil company's bonds continue to inch tighter, with the 2024s quoted this morning at 415bp-400bp. Meanwhile the sovereign's benchmark 2025s are also up at 101.10-101.50.
The primary market is also finally showing signs of life, with some US$5.5bn in new supply seen this week, including Argentina's local tap of its Bonar 2024s.
Paraguay was seizing the moment to tap its 2023s with initial price thoughts of 4.25%. Those bonds were trading today around 4.12%, according to Thomson Reuters data. Continuación...