NEW YORK, Aug 18 (IFR) - Peru raised US$1.25bn in the bond market on Tuesday, breaking a month-long issuance lull in Latin America and defying negative sentiment about the region’s commodity exporters.
Many commodity credits struggled on a day that started out with an overhang from China, where stocks suffered another sharp sell-off overnight.
Bonds issued by Brazilian oil company Petrobras and iron ore producer Vale were both about 10bp wider on Tuesday, with the former’ s 2024s being spotted at 570bp-560bp.
In Chile, however, Codelco proved to be the exception. The copper company’s 2044s widened another 5bp to hit 252bp-248p, although the country’s credits on the whole were well bid.
“We are finding increased opportunities in EM, (and) every day we come in and there are more opportunities,” said Ricardo Adrogue, head of emerging markets debt at Babson Capital
Peru launched a new US$1.25bn 12-year bond at 195bp over US Treasuries, at the tight end of guidance of 200bp (+/-5bp) and well inside initial price thoughts of 225bp area.
The final spread level left some accounts cold, as they sought a higher premium to buffer against the possibility of slower growth in China and further declines in commodity prices.
But the Andean nation was still seen offering a relatively decent premium to its existing 2025s, which were trading at a G-spread of around 158bp-162bp.
The trade also came about 20bp-25bp over the 170bp-175bp fair value level that one banker was calculating for a new 12-year.
Given the high dollar price on the country’s existing bonds, accounts should have also liked the upside potential on a new bond issued closer to par.
Peru is also seen having some of the strongest fundamentals in Latin America, a region whose economies are suffering from sub-par growth. Pricing was expected later in the day through global coordinators Citigroup and JP Morgan. (Reporting by Paul Kilby; Editing by Marc Carnegie)