Eclectic trio lead charge in LatAm primary markets

miércoles 4 de mayo de 2016 13:48 GYT

By Paul Kilby

NEW YORK, May 4 (IFR) - Supranational borrower Corporacion Andina de Fomento (CAF) was being joined by Panamanian state-owned airport Tocumen, and junk rated AES Dominicana in a somewhat fragile primary market for EM names on Wednesday.

This was Tocumen's second bond foray, but this time it came with a security governed by New York law - as opposed to the local law format used in its first issue which was placed mostly among domestic accounts in 2013.

Leads Citigroup squeezed pricing about 3/8 of a point before landing the US$625m 20-year bond with a 15.9-year average life at a yield of 5.375%.

That level, which is the equivalent of around 340bp over Treasuries, arguably looks tight to the existing 5.75% 2023s, which are being spotted at around 5.00%, or a G-spread of around 360bp.

The spread differential between local and international law bonds is typically anywhere between 90bp and 120bp, but such distinctions are difficult to define in Panama, said Sean Newman, a senior portfolio manager at Invesco.

"Either the new bond is very cheap or the old bond is very expensive," he said. "It is a tough assessment."

It was a different story however against the sovereign curve, where the existing 2028s have been trading at G spread of 180bp and made Tocumen's new deal attractive to some accounts.

That proved insufficient for some investors who thought the dominance of regional airline COPA required a bigger pick-up to compensate for such risks.   Continuación...