4 MIN. DE LECTURA
NEW YORK, June 29 (IFR) - Latin American primary markets sprung to life on Wednesday after five issuers moved forward with bonds amid an improving backdrop for the region's borrowers.
The Dominican Republic launched a US$500m tap of its 6.875% 2026s, while Argentine confectionary company Arcor, the Province of Salta, and Brazilian beef name Marfrig were also tapping the primary market on Wednesday.
Colombian road concessionaire Costera has also opened books on a dual-currency trade ahead of pricing on Thursday, while Argentine oil company YPF has done the same on an unusual peso-linked four-year bond denominated in dollars.
Chilean utility Transelec is also preparing roadshows for next week.
With broader markets extending gains on Wednesday as immediate concerns fade about the UK's exit from the European Union, Latin American issuers have been quick to come off the sidelines to lock in low interest rates.
Yields on the 10-year Treasury hovering around four-year lows at 1.46% despite a renewed bid for risk assets and LatAm assets have recovered from a recent rout caused by the Brexit vote on Thursday.
"Most stuff is back to pre-Brexit levels when they were already close to the best levels year to date," said a syndicate manager. "Brexit volatility had delayed issuers but now they are starting to revive (deals)."
The buyside meanwhile has money to put to work after raising cash in preparation for redemptions post Brexit and see further upside in EM as the hunt for yield continues amid accommodative monetary policies across the developed world.
"Central Bank action could alter any negative (fallout from Brexit), and that is one of the drivers behind the risk on market," said Sean Newman, a senior portfolio manager at Invesco.
Such positive technicals have left issuers reaping the rewards.
At initial price thoughts of mid 6%, Argentine confectionary company Arcor's US$350m seven-year non-call four, rated B1/B+, was seen coming at particularly tight levels after books hit around US$1.8bn.
A launch level of 6% came inside final guidance of 6.25% (+/-12.5bp) and arguably flat to inside where the sovereign, rated, B3/B-/B, would have printed its own seven year, bankers told IFR.
It also came inside the 6.625% yield that Argentine internet service provider Cablevision, rated B3/B+, would likely achieve on a bond of that tenor, said another banker.
Arcor's rarity value, the sector's safe haven status and its higher rating versus the sovereign make it a popular credit, but some investors thought price tightening was excessive.
"Argentine corporates have been well bid, but we are getting to where valuations are stretched," said Jason Trujillo, an analyst at Invesco.
Elsewhere issuers were also enjoying decent price action.
Marfrig launched a US$250m tap of its 8% 2023s at 7.625%, 25bp tight to IPTs, while the Dominican Republic has set a final yield of 5.60% on a US$500m tap of its 2026s - inside IPTs of 5.875%.
Order books on the Dominican Republic deal swelled to around US$3bn, allowing the Caribbean nation to come flat to secondary levels seen at Tuesday's close. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)