NEW YORK, April 13 (IFR) - LatAm bond markets were putting in a mixed performance Monday but bankers were looking ahead, betting on a pick-up in primary activity later this week in what remains an attractive backdrop for borrowers.
“The market is in great shape in terms of overall risk sentiment,” said a syndicate official. “From a technical standpoint the market remains under supplied on the corporate side.”
This comes as the asset class continues to benefit from inflows as investors seek value in an asset class that still looks comparatively cheap.
“EM continues to benefit from cheap valuations with index spreads tightening 14-21bp this past week and narrowing the gap to other risky assets,” Siobhan Morden, head of Latin America strategy at Jefferies this morning.
Still, Brazilian assets were looking a touch softer Monday morning after enjoying decent run-up over the past week despite Fitch’s decision Thursday to put the sovereign’s BBB rating on negative. The country’s 2025s were being quoted at around 99.65, down about 50 cents on the day.
Vale was also under some pressure this morning as its 2022s slipped to 96.98 after S&P warned that it could soon downgrade the Brazilian credit along with other miners as it adjusts its estimates on iron ore prices lower.
Beef producer JBS, on the other hand, was enjoying a jump in debt prices with its 2024s climbing to 104.25-105.00 after Moody’s upgraded its notes to Ba2. The rating agency cites how a strong performance in key business units have improved credit metrics, with adjusted leverage dropping to 3.8 times at the end of last year from the 5.0 times seen in 2013.
“Assuming no major acquisitions in the near-term, as has been publicly pledged by the company, and stronger cash generation, we estimate that normalized gross leverage could reach 3.5x in 2015,” it said.
Elsewhere, a jump in crude prices and restrictions in the supply of hard currency for foreign travel were providing support to Venezuelan debt.
“This could represent savings for the government of about US$2.8bn in FX allocations in 2015, a non-negligible amount that could provide needed relief for Venezuela’s tight cash flows,” Barclays analysts said about FX restriction Friday. The Venezuela 2022s were being quoted earlier today at 51.50-52.50.
PIPELINE ACI Airport Sudamerica, the controlling shareholder of the concessionaire of Uruguay’s Carrasco airport, has mandated BAML and Nomura to arrange investor meetings.
The meetings start today in New York and Santiago, and will continue in Boston and New York on April 14 and London and Los Angeles on April 15. A potential senior secured 144A/Reg S transaction backed by future dividends received in connection to a long-term airport concession contract may follow.
ACI Airport Sudamerica is controlled by Corporacion America Airports, which has 52 airports under management.
BBVA Colombia has hired BBVA Securities and Morgan Stanley to arrange investor meetings ahead of a potential US dollar-denominated Tier 2 subordinated bond offering.
The meetings continue in London today, and head to Boston on April 14 and New York on April 15.
Pacific Rubiales, the largest private oil producer in Colombia, has kicked investor meetings through Bank of America Merrill Lynch, Citigroup and HSBC.
This week the company will head to New York on April 13 and 14, Boston on April 15, Santiago on April 30, Los Angeles on May 4 and Miami on May 6. (Reporting By Paul Kilby)