Feb 11 (IFR) - Andean and Mexican names outperformed in a flight-to-safety bid Wednesday as investors shed oil names and stayed clear of credits associated with the scandal at Brazil’s Petrobras.
The backdrop continues to serve Argentine borrowers well, as investors bet on more upside in a country expected to enjoy a more market-friendly government come elections in October.
The City of Buenos Aires was able to address refinancing risks today as it raised US$500m with a six-year bond that saw some US$2bn in demand.
Proceeds from the bond - which was priced to yield 8.95%, or some 30bp tight to initial talk - will go toward covering an April 6 bond maturity of roughly the same size.
Meanwhile a return to a 2% yield on the US 10-year Treasury applied further pressure on the sovereign space, where Brazil 2025s are now trading at a mid-market price of 96.75.
Still, Chilean retailer Cencosud’s recently minted 10 and 30-years, which have suffered from the back-up in rates, were recovering a touch, according to one trader.
Those bonds were up about 1/8, with the 2025s being quoted at 98.75-99.24 and the 2045s at 98.25-98.75.
Elsewhere, news of US stockpiles hitting record highs sent Brent and US crude lower to hit US$54 and US$48.83 a barrel respectively, Reuters reported.
With crude failing to find a floor, oil names continue to suffer, including Brazil’s Petrobras, which saw its curve ending 10bp wider today.
This comes even though the company now plans to release delayed audited fourth-quarter results by the end of March as it seeks to avoid a technical default on its bonds, according to Reuters, citing the Globo newspaper.
Meanwhile bonds issued by E&P unit Pacific Rubiales gave up some recent gains, falling up to 1.5 points, while state-owned oil company Ecopetrol slipped about 1/8 of a point.
Pacific Rubiales 2019s, 2021s and 2025s were closing 72.00-73.00, 70.00-71.00, 64.00-64.75, while Ecopetrol’s 2025s and 2045s were ending the day at 95.25-96.00 and 97.375-97.875.
With the City of Buenos Aires bond sale done and dusted, there is very little left in the visible primary pipeline.
Corporates are facing blackout periods and so are unlikely to announce deals at this stage, though bankers are still awaiting news of bond announcements from Uruguay and Costa Rica, which has already mandated banks on an up to US$1bn trade.
Grupo Senda Autotransporte, a Mexican bus transportation company, has finished roadshows ahead of a possible USD 144A/Reg S bond offering. Expected ratings are B/B (S&P/Fitch). CS and JP Morgan are active bookrunners, and BBVA passive.
Mexican media company TV Azteca is bringing to market a rare project bond related to the development of the Andean country’s fiber optic network. Pricing is expected toward end of February.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale that could take place as early as this month, market sources told IFR on Wednesday. (Reporting by Paul Kilby; Editing by Marc Carnegie)