NEW YORK, March 20 (IFR) - Latin American sovereign and corporate bonds ended higher in price and tighter in spread terms on Friday, helped by a weaker dollar and higher crude prices.
Sovereign bonds were generally outperforming US Treasuries, particularly at the long end of the curve, while several corporate names were also ending tighter.
“I think it’s all driven by oil, Treasuries and the fact that people weren’t long on any of this,” said a corporate bond trader in New York.
With the yield on 10-year US Treasuries tighter by almost 5bp at 1.93% and WTI crude prices up 4.9% on the day, several oil-related names were rallying.
The curve of state-run Brazilian oil company Petrobras, for example, tightened by some 20bp at the belly and 12bp at the long end, with 2024s and 2044s quoted respectively at spreads of 568bp-563bp and 568bp-560bp.
The improved backdrop was also bolstering bonds of other state-controlled oil companies.
In Mexico, Pemex’s 2041s and 2025s advanced by 2.25 and 1 points respectively to end the session at 110.5-111.0 and 100.0-100.5, while the curve of Colombia’s Ecopetrol was also about 1 point higher.
Among sovereigns, Peru’s newly tapped 2050s outperformed the rest of the low-beta complex after ending at 118.25-119.00, up 3 points from their reopening price of 115.378.
That compares with gains of around 2 points for long-dated Mexican sovereign bonds and a 1 point gain for Brazil’s long-dated paper.
“Peru has done well, and I didn’t see any material flipping at all,” said a sovereign bond trader in New York, explaining the practice of selling newly printed paper to lock in a quick gain. “I think people used this as an opportunity to increase exposure if they were underweight.”
While sovereign supply has dominated primary market activity in Latin America so far this year, upcoming deals for ColTel and Red Dorsal are expected to provide an interesting test of investor appetite for corporate paper.
Colombia Telecomunicaciones (ColTel) will wrap up investor meetings on March 24, ahead of a potential US dollar-denominated hybrid bond issue.
In Peru, Mexican media company TV Azteca is also expected to bring to market a project bond related to the development of Peru’s fiber optic network as soon as next week.
Reporting by Davide Scigliuzzo; Editing Paul Kilby