NEW YORK, Feb 19 (IFR) - Latin American credits were off to a mixed start Thursday as another tumble in crude prices weighed on oil names and a renewed bid from locals in Brazil brought some support to that country’s corporate bonds.
“Brazilians came back with a lot of appetite from the Carnival (holidays),” said a New York based trader, noting that many Brazilian names are now well off their lows.
Still, investors and bankers continue to look at the Brazilian story askance despite Finance Minister Joaquin Levy providing an upbeat message in New York yesterday. “He painted too much of a rosy picture and I think investors were expecting a good dose of realism,” said one banker.
This comes as Brent crude prices fell below the US$59 a barrel mark today as supply concerns returned, according to Reuters.
Brazilian oil company Petrobras was opening about 5bp wider with the 2024s being quoted at around 509bp this morning. Colombia’s Ecopetrol is also watching its curve sell-off with its 2043s, falling about half a point to 113.00-113.50.
Venezuela is being hit particularly hard as a result of the reversal in crude price gains, with the sovereign’s 2022s slipping several points this morning to hit 47.50-48.50. However, the short-end is holding up better as locals provide some support.
“Oil is down about US$5.00 since the highs on Friday,” Jorge Piedrahita, CEO of broker Torino Capital, wrote this morning. “Venezuela, PDVSA are getting creamed with the exception of the short end. We would be buyers three or four dollars from this point.”
Meanwhile, bonds issued by Brazilian iron ore producer Vale were holding steady, with its 2022s about 1bp wider at a G-spread of 306bp. This comes after the company reported higher than forecasted production numbers today as it looks to offset falling iron ore prices.
In the primary market, Mexican telco America Movil cut a solitary figure after announcing roadshows today as it seeks to market a global peso trade through BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley.
The company will visit investors in the US and Europe between February 20 and 27.
The announcement follows another, albeit differently structured, peso trade targeted at foreigners from Mexico state-owned oil company Pemex, which earlier this month sold the country’s first-ever Euroclearable local instrument through a tap of its 7.47% 2026s that was priced at Mbonos plus 190bp.
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. (Reporting By Paul Kilby)