UPDATE 1-Uruguay breaks lull in LatAm primary markets

lunes 19 de octubre de 2015 10:53 GYT

(Adds more comments, details on new bond)

By Paul Kilby

NEW YORK, Oct 19 (IFR) - Uruguay announced a new benchmark-sized US dollar bond due 2027 on Monday, breaking a close to two-week lull in the LatAm primary market.

With initial price thoughts set at 265bp area over Treasuries, the South American country is seen offering a generous 45bp-55bp new issue concession over its curve.

That cautious approach is warranted given what remains a wobbly backdrop for emerging markets after data showed that Chinese growth dipped below 7% for the first time since the financial crisis.

"The tone has been better ex-Brazil, but this is still really a market for sovereigns and quasi sovereigns (only)," said a senior banker away from the deal.

The deal is being done in conjunction with a liability management transaction targeting the sovereign's outstanding 2017s, 2022s, 2024s and 2025s.

This should help provide a natural underlying bid for the new bond as should demand from local investors.

"Uruguay has a strong domestic bid for their bonds, which keeps them tight," said the banker.

The amortizing bond, which has an average life of around 11 years, is being led by Citigroup, HSBC and Itau.

The South American country, which is rated Baa2/BBB/BBB-, is expected to price the deal today. (Reporting by Paul Kilby; Editing by Shankar Ramakrishnan)