NEW YORK, April 17 (IFR) - Latin American credit markets were largely ending softer Friday as broader global markets sank on concerns about new Chinese regulations and the outcome of Greek debt negotiations.
“It wasn’t a good day for fixed-income markets,” said a sovereign debt trader. “We saw mostly sellers and not much liquidity.”
With broader markets selling off, investors who focus on Latin America have been taking risk off the table ahead of a Petrobras board meeting on Wednesday, when the company is expected to sign off on overdue audited results.
Petrobras and other Brazilian credits have enjoyed a considerable run-up of late. But further delays in the release of the financials could scare investors who have been betting the company would soon eliminate the risk of a covenant breach.
“I hope these guys release results,” said the trader. “If they don‘t, it could get ugly.”
Brazil 2025s were closing at 99.50, or a good point lower on the week, while bonds issued by Petrobras continued to give back gains. Its 2024s and 2044s were closing some 10bp wider at around 465bp-460bp and 490bp-485bp, respectively.
Elsewhere in the Brazilian corporate space, credits that have lagged the recent rally were holding up well. Spreads on miner Vale’s 2022s were steady at 315bp despite some volatility in the US Treasury market, where yields on the 10-year jumped as high as 1.91% Friday on inflation concerns before falling back to 1.84%.
In other parts of the region, BBVA Colombia’s new 10-year subordinated Tier 2 bond was outperforming, climbing to around 100.75-100.80 after pricing yesterday at 99.914 to yield 4.885%, or Treasuries plus 300bp, on the back of some US$2.7bn in demand.
Meanwhile bankers are hoping that markets will settle down next week now that the pipeline is starting to swell.
“The market has been strong over the last few weeks and this is the first very soft day we have had for a while,” said a syndicate official.
“Hopefully this is a one-day risk reversal, as it has been a good window and supply is finally starting to come.”
Banco de los Trabajadores (Bantrab) will hit the road next week to market a possible subordinated debt offering through Deutsche Bank. The Guatemalan bank, which focuses on payroll lending to public sector employees, will be in Santiago on April 20, in Switzerland on April 22, in New York on April 23 and in Miami on April 24. The bank carries corporate ratings of Ba3/BB- by Moody’s and Fitch.
ACI Airport Sudamerica, controlling shareholder of the concessionaire of Uruguay’s Carrasco airport, has mandated Bank of America Merrill Lynch and Nomura to arrange investor meetings, which finished on Wednesday in London and Los Angeles.
A potential senior secured 144A/Reg S deal backed by future dividends from a long-term airport concession contract may follow.
Empresa Electrica Guacolda S.A. (Guacolda) has kicked off roadshows as it markets a senior unsecured 144A/Reg S USD bond. The borrower mandated Citigroup, GS and Itau as global coordinators, while Scotiabank is joint bookrunner.
The company was in Santiago and London today and will head to Los Angeles on April 20, New York on April 21 and Boston and New York on April 22. Guacolda is owned 50% plus 1 share by AES Gener (Baa3/BBB-/BBB-), while the remainder is held by infrastructure fund Global Infrastructure Partners. Expected ratings are BBB-/BBB-.
Pacific Rubiales, the largest private oil producer in Colombia, has kicked off a series of investor meetings through Bank of America Merrill Lynch, Citigroup and HSBC.
The company will head to Santiago on April 30, Los Angeles on May 4 and Miami on May 6. (Reporting by Paul Kilby; Editing by Marc Carnegie)