LatAm borrowers emerge on ECB support
By Paul Kilby
NEW YORK, March 5 (IFR) - Latin American credits remained on firm footing Thursday as the European Central Bank prepares to kick off a EUR60bn monthly asset purchase program next week.
While expected, news about the ECB's quantitative easing has helped the broader tone and encouraged some issuers to come out of the shadows, with both Costa Rica and Kimberly-Clark de Mexico moving forward with bond sales today.
Despite concerns about illiquidity, technicals remain supportive for new issues - and investors have money to put to work.
"(ECB President Mario) Draghi has said he is willing to buy bonds at a negative yield and that has created a bid for Treasuries," said a New York-based trader.
"Selling pressure at the long-end of Latin American sovereign curves has stopped."
Costa Rica set initial price thoughts of 462.5bp on a new 30-year bond, providing a decent pick-up to the 410bp-415bp secondary spread seen on the existing 2044s, according to Klaus Spielkamp, a trader at Bulltick in Miami.
"It is a nice premium to the existing bonds," he said. "The market is clearly liquid and looking for (buying) opportunities, provided that the premium to the existing curve is enough."
Meanwhile Kimberly-Clark-de Mexico, 48% owned by US-based Kimberly-Clark Corporation, is testing the waters with IPTs of 135bp area on a will-not-grow US$250m 10-year, offering 15-20bp over the company's existing 2024s. Continuación...