Petrobras 10-year bonds come under pressure
By Paul Kilby
NEW YORK, May 18 (IFR) - Petrobras's newly minted five and 10-year bonds were down a few points in the secondary market early on Wednesday amid a weaker market tone and complaints about allocations.
The 8.375% 2021s issued by the Brazilian state-controlled oil company on Tuesday was spotted at 98.90-99.00 Wednesday morning after pricing at 99.002.
The 8.75% 2026s was the clear underperformer, quoting at 96.90-97.10 versus a reoffer price of 98.374.
Besides the weakness in broader markets on Wednesday, analysts and traders also pointed to heavy allocations on the 10-year as another reason for the sell-off.
Clients were heard selling the 10-year bonds on Wednesday after receiving full allocations on the security.
The US$21bn book was skewed more heavily to the larger US$5bn five-year, leaving the company issuing a smaller US$1.75bn 10-year after some investors complained they were not being compensated for extending further up the yield curve.
"The curve is ridiculously flat," an investor who participated in the five-year told IFR on Tuesday. "The 10-year is not compensating you for the five to 10s curve."
The five-year was priced at a yield of 8.625% versus 9% on the 10-year, making for a 37.5bp spread differential between the two - less than the 46bp between yields on the five and 10-year US Treasuries on Wednesday. Continuación...