LATAM WRAP-Bancomext breaks LatAm primary lull

martes 6 de octubre de 2015 16:26 GYT

By Paul Kilby

NEW YORK, Oct 6 (IFR) - Mexico's Bancomext broke the lull in the LatAm primary activity with a US$1bn 10-year on Tuesday but had to pay wider spreads than had been expected.

A multi-day rally in LatAm credit set a solid backdrop for issuance, even as equities retreated and the IMF forecasted the region's first recession since 2009.

Bancomext's rarity value - it has not been in the dollar bond market since 2004 - and strong support from the sovereign government should have worked in the trade bank's favor.

Yet the evolution of pricing on the deal, rated A3/BBB+, arguably underscored the fragility of the region's primary market.

Bank of America Merrill Lynch and HSBC inched the deal in just 12.5bp from initial price thoughts to launch at 237.5bp.

At that level, the trade offered a pick-up of close to 100bp over the Mexican sovereign, whose 2025s were trading at around 143bp earlier in the day.

The deal's relatively large size may have pushed pricing higher, though the all-in cost may still have looked attractive when the yield on the 10-year Treasury is hovering around 2%.

But differentials to the sovereign surprised some bankers, who noted the bank's debt is explicitly guaranteed by the federal government - something other Mexican quasi-sovereigns such as oil company Pemex and utility CFE don't have.   Continuación...