NEW YORK, Feb 20 (IFR) - Latin American credit markets were ending the week slightly wider but well supported despite uncertainty over the outcome of negotiations between Greece and its euro-zone creditors.
“The whole Greece situation is uncertain, but there is no panic,” said a New York based trader. “Flows are light and if anything we are seeing better buying on weakness.”
Argentina is proving to be the out performer Friday after US court mediator Daniel Pollack released a statement on Thursday saying that holdout creditors had recently renewed their offer to negotiate with the sovereign.
Pollack’s statement suggested that litigant investors had expressed a willingness to accept no cash upfront as part of the settlement.
The country’s defaulted bonds were up another 3/4 of a point this morning on the news, though some market participants thought the rally overblown.
“People took Pollock’s comments too positively,” said a broker. “It was always on the table that holdouts would accept bonds as means of payment. It is just an excuse for a trend that continues.”
Dollar discounts were being quoted earlier at 98.00-99.00, up from a 97.25 closing level yesterday.
Meanwhile, the region’s other high-beta sovereign credit, Venezuela, have been inching higher in late morning trading as Brent crude climbs back to above US$60 a barrel. The sovereign’s 2022 were being quoted at 47.75-48.75.
While yesterday’s arrest of Caracas mayor and opposition leader Antonio Ledezma has weighed on sentiment, the move is being viewed as another sign of the government’s waning popularity ahead of parliamentary elections expected later this year.
Elsewhere, Brazil is experiencing a relatively quiet session. Bonds issued by oil entity Petrobras, - which has been at the center of a corruption scandal - were largely unchanged. Its 2016s, 2024s and 2044s being quoted earlier at 485bp-470bp, 520bp-510bp and 520bp-510bp, respectively.
This comes as EM fixed-income funds enjoy another week of inflows, with assets under management increasing by 0.14%, according to Standard Bank. EM local bond funds, however, saw assets under management shrink by 0.24% this week.
Potential trouble spots in Ukraine, Venezuela and Brazil remain areas of concerns in what remains a fragile market, not to mention a possible Greek exit from the eurozone.
“The last thing EM now needs is a bout of risk aversion triggered by a Grexit and a subsequent Greece default, but assuming that cool heads and pragmatism do prevail in today’s Eurogroup meeting, such a scenario would be avoided,” Standard Bank said.
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.
Panama filed with the SEC to sell up to US$3.04bn in debt, raising expectations that the sovereign could soon come to the international bond market.
Bankers have been awaiting a mandate decision from the sovereign, which sent out request for proposals earlier this month. (Reporting By Paul Kilby)