NEW YORK, March 2 (IFR) - LatAm credit markets got March off to a quiet but well-supported start on Monday, following one of the largest inflows into EM funds in almost a year.
EM debt funds saw a net inflow of US$1.14bn last week, according to data from EPFR, underscoring better technicals as LatAm investors remain starved of new supply.
“This was the largest inflow since May 2014 and looks like a reversal of the outflows from November-January,” Siobhan Morden, head of Latin America strategy at Jefferies, wrote this morning.
According to EPFR, the buyside has also been adding exposure to some of the more battered credits in recent months, with Brazilian funds posting their largest inflows last week since early January.
Meanwhile last week’s new issues continue to hold their own.
Mexican cement company Cemex’s new dollar-denominated 2025 is trading at 100.625-100.875 versus a 99.98 reoffer. Its euro-denominated 8NC4 was also well bid at 100.375-100.625 after pricing at par last week.
It was a similar story for the sovereign after Mexico returned to the euro market last week with a EUR2.5bn dual-tranche bond sale.
The new 30-year was quoted this morning at 100.15-100.25 versus a reoffer of 98.199, while the nine-year was spotted at 100.20-100.40 after pricing last week at 99.486.
Today, however, is likely to be slow as borrowers step aside and wait for pharmaceutical company Actavis to price an expected US$22bn nine-tranche offering on Tuesday.
“The market is looking good but there is a huge trade in high-grade, and that is taking a lot of steam out of our market,” said a syndicate source focused on EM.
Markets this week will largely be looking for direction from the European Central Bank and the Fed ahead of the release of job numbers in the US on Friday.
Brazilian state-controlled oil company Petrobras continues to find some support after rallying Friday following a two-notch downgrade from Moody’s to Ba2.
The ratings agency’s aggressive stance may spur the company to release delayed audited results sooner rather than later, some traders think.
The company’s curve was largely opening flat, with traders reporting appetite at the short end of the curve among real-money and retail accounts seeking yield.
Petrobras 3.875% 2016s were trading this morning at a yield of 6.20%-5.61%, or 602bp-542bp over.
Mexican telco America Movil is meeting investors in Europe and the US this week as it markets a global peso trade through BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley.
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.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale.
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. (Reporting by Paul Kilby; Editing by Marc Carnegie)