LatAm credits extend rally as borrowers emerge
By Paul Kilby
NEW YORK, Feb 26 (IFR) - Latin American credit markets were extending gains Thursday morning as investors grew more comfortable about the timing of US interest rate hikes and any immediate risks from Greece.
"We are opening tighter and have a bid for duration and risk now that (Fed Chairwoman Janet) Yellen is done and that everything is behind us regarding Greece," said a New York-based trader.
The improved tone has brought several issuers out of the woodwork, with euro issuance the flavor of the day among Latin American issuers.
The Mexican sovereign, rated A3/BBB+/BBB+, has launched a EUR1.25bn March 2024 at 110bp over mid-swaps and a EUR1.25bn March 2045 bond at 190bp over mid-swaps.
Further down the credit spectrum, Mexican cement company Cemex (B+/BB-) is trying its hand at a new euro-denominated 2023, with price talk set at 4.875% area, as well as a USD 2025 being talked in the 6.625%-6.75% range.
Books on the trade had breached the USD10bn mark by early morning as investors piled into a name that has become a high-yield benchmark among both EM and crossover accounts.
"The credit suffered when the US housing market suffered, but now that is coming back," said a banker. "It is a credit that everyone knows, and they want to have it in their portfolios."
Euro borrowing may still look expensive versus dollars, but for borrowers that can keep the original currency such trades make sense, the banker said. This applies to both Mexico and Cemex, which has operations in Europe. Continuación...