NEW YORK, Feb 13 (IFR) - Progress in Greek debt negotiations, a UK court ruling on Argentina’s bonds and the extended rally in oil prices made for a positive start Friday in the Latin American credit markets.
Brazilian credits continue to advance. Bonds issued by Petrobras rallied another 10bp-15bp this morning after oil breached the US$60 per barrel mark.
Meanwhile investors responded positively to news that capex cuts and asset sales are on the cards for the beleaguered state-owned oil company.
The long end of the Petrobras curve has flattened, with both the 2024s and 20244s trading at 520bp, while the 2016s are now being quoted at 500bp.
But traders are questioning whether the rally has legs, amid talk that this may be a good opportunity to reduce exposure to the credit, which is now just one notch above junk.
“Some accounts have concerns that Petrobras could be downgraded and are thinking about taking profits,” said a trader.
Elsewhere in Brazil’s corporate space, Banco do Brasil has rallied several points this week, with its 9% and 6.25% perps being bid at 84.00 and 70.00, respectively, the trader said.
Both New York and UK-law bonds issued by Argentina were up this morning after a London court ruled that English law applied to its euro-denominated debt under that jurisdiction.
The decision comes in response to a filing last year from a number of funds - including George Soros’s Quantum Partners - which objected to be being impacted by a US court ruling that effectively stopped payment on Argentine debt unless the government made holdout investors whole as well.
Euro pars leapt 1.25 points in early trading to 49.50-50.25, while euro discounts rallied a good three points to 91.75-92.75.
Dollar pars and discounts also enjoyed some gains, advancing 50cts and a point respectively to hit 52.25-53.00 and 93.00-94.00.
The market’s positive response seemed strange to some participants who think the London court statement did little to resolve the payment problem faced by holders of Argentine debt.
“It clearly doesn’t impact dollar bonds,” said one trader. “But you have to buy something (on good sentiment).”
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 the 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. (Reporting by Paul Kilby; Editing by Marc Carnegie)