NEW YORK, Sept 22 (IFR) - Latin America suffered another ugly day on Tuesday, as commodity producers and Brazilian credits led the region lower amid renewed concerns about Chinese growth.
Beleaguered Brazilian oil firm Petrobras and state-owned banks proved to be the clear underperformers as the Real hit record lows and investors ditched the region’s largest economy.
Petrobras’s benchmark 2024s were closing at around 71.50-72.50, marking a six-point drop since Friday. It was a similar story at the long end of its curve, where the 2044s, down about six points since last week, were at 66.50-67.50.
By day’s end, however, traders reported some buying interest in quasi-sovereign credit, especially among longer-dated bonds, which could put a floor under the freefall in prices.
Financials were also buffeted by the uncertainties surrounding the government’s ability to pass the fiscal measures needed to right Brazil’s floundering economy.
Banco do Brasil’s 9% perps have tumbled eight points since Friday to trade today at 60.25.
Meanwhile Moody’s downgraded Brazilian mall operator General Shopping to B2 from B1 on Tuesday. The agency cited the company’s “strained liquidity position” following its decision to defer payments on its 12% perp and tender for its 10% perps.
“There is uncertainty regarding the company’s future financial flexibility and earnings power to address the accrual of deferred interest,” Moody’s said.
General Shopping’s 12% perps were quoted as low as 22.00 on Tuesday, while the 10% securities were trading around 49.00.
Elsewhere, Argentine bonds were also suffering a sell-off - but for different reasons.
Sovereign dollar bonds dropped 1-2 points on Tuesday following news that regulators would force local mutual funds to value their dollar assets at the official exchange rate instead of a weaker market rate.
“This would be a huge blow,” said another trader. “Mutual funds were selling before their net asset value would take a hit.”
Dollar denominated Bonar 2024s were being offered at 97.00, marking a two-point drop on the day.
Mexico’s state-owned Bancomext has hired Bank of America Merrill Lynch and HSBC to arrange meetings with fixed-income investors ahead of a potential US dollar-denominated bond sale.
The meetings will take place in New York and Santiago on Wednesday, Boston and Los Angeles on Thursday, and London and Los Angeles on Friday. A 144A/Reg S transaction may follow.
Mexican white-goods manufacturer Controladora Mabe has started fixed-income investor meetings through Barclays, Bank of America Merrill Lynch, Citigroup and JP Morgan.
The issuer was in Boston today and will head to New York and Los Angeles on Wednesday before returning to New York again on Thursday. Ratings are BB+/BB+.
Aeris Holding Costa Rica, the operator of the Central American country’s main airport, is preparing an approximately US$127m bond sale, according to Moody‘s.
The agency, which assigned a provisional Ba2 rating to the deal, said proceeds would refinance loans extended by shareholders, the Overseas Private Investment Corporation and the IDB.
The Province of Neuquen, the third-largest oil-producing and largest gas-producing province in Argentina, ended roadshows on Monday through Deutsche Bank and JP Morgan.
A USD-denominated 144A/Reg S senior secured capital market transaction secured by gas royalties may follow.
Panama’s Canal Authority (ACP) wrapped up roadshows on Monday through Bank of America Merrill Lynch as it looks to market a US dollar 144A/Reg S bond.
ACP, the entity in charge of the operation and expansion of the Panama Canal, is rated A2/A-/A.
Mexican real-estate investment trust Fibra Uno has completed meetings with fixed-income investors through Bank of America, Credit Suisse, HSBC and Santander.
Terrafina, another Mexican REIT, has also finished meeting accounts as it markets a potential US$400m-$500m bond offering.
The borrower has mandated Barclays and Citigroup as lead managers, with Itau coming in as co-manager. Expected ratings are Baa3/BBB-. Both REITs could tap the market this week. (Reporting by Paul Kilby; Editing by Marc Carnegie)