NEW YORK, May 1 (IFR) - Latin American credits were enjoying some modest spread tightening on Friday, but liquidity remained light as May Day celebrations across the globe slowed trading activity.
"There is not a whole lot going on, but things generally feel strong," said a corporate bond trader in New York. "Bids are generally tighter than what we saw at the close yesterday and offers are a lot less competitive."
In Brazil, investors were largely shrugging off Standard & Poor's decision to downgrade Vale to BBB from BBB+, with spreads on the miner's bonds opening some 3bp-4bp tighter.
The company's 2022s, for example, were quoted at 267bp-260bp, while the 2042s were spotted at 353bp-347bp, according to a second New York-based trader.
"The metals and mining sector has been punished for a long time, but quite frankly we have seen a good rebound, and iron ore prices are up sharply from the lows," said the first trader.
Notes of state-run oil company Petrobras, meanwhile, were broadly unchanged on the day, with 2024s and 2044s quoted at 425bp-420bp and 461bp-456bp respectively.
Positive flow data for emerging market bond funds was also seen supporting sentiment. According to EPFR data quoted by UniCredit, US$967m flowed into the asset class during the week ended April 29, marking the largest weekly inflow in nine weeks.
Hard-currency bond funds posted US$798m of inflows, while local currency funds recorded US$87m of outflows. Blended-currency funds accounted for the remaining net inflow.
While hard currency funds have enjoyed inflows for 12 out of the last 13 weeks, flows into local currency funds have proved more erratic so far this year.
"The trend here is not clear at all, with flows changing direction on a weekly basis," Demetrios Efstathiou, a strategist at ICBC Standard Bank, wrote in a note to clients on Friday.
"We expect a more favorable outlook (for EM local bonds) helped by the reversal of long US dollar positions, and range bound US Treasury yields, driven by the weaker-than-expected US economic data."
Chile could soon return to international capital markets with a new bond deal after sending requests for proposal to banks earlier this month, according to three sources with knowledge of the situation.
The sovereign, rated Aa3/AA-/A+, is expected to raise at least US$1bn-equivalent through the deal, which could materialize as soon as next week, one of the sources said.
Votorantim Cimentos (Baa3/BBB/BBB) has mandated Citigroup, Deutsche Bank, HSBC, Banco Votorantim, BB Securities, Bank of America Merrill Lynch, MUFG and Santander GBM to arrange a series of investor meetings ahead of a potential euro-denominated bond issue.
The meetings will take place in Frankfurt and Munich on May 4, London on May 5, and Amsterdam and Paris on May 6.
JB y Compania SA de CV (Jose Cuervo) kicked off fixed-income investor meetings this week through Bank of America Merrill Lynch and Citigroup as it seeks to market a possible senior unsecured US dollar bond.
The borrower is in Los Angeles today and will head to Chicago on May 4 and New York on May 5. The spirits company, rated BBB/BBB by S&P and Fitch, is the world's largest tequila producer.
Pacific Rubiales, the largest private oil producer in Colombia, has kicked off investor meetings through Bank of America Merrill Lynch, Citigroup and HSBC. The company heads to Santiago on Thursday, Los Angeles on May 4 and Miami on May 6. (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)