NEW YORK, April 20 (IFR) - Southern Copper, a miner with operations in Peru and Mexico, hogged the limelight Monday with a rare US$2bn bond sale in an otherwise quiet session for Latin America credit markets.
With oil prices higher and the yield on the benchmark 10-year US Treasury still comfortably below 2%, the region’s benchmark bond prices held steady amid an improving tone in emerging markets as China moved to combat slowing growth.
Brazilian oil firm Petrobras continues to be the focus of attention ahead of the expected release of audited financial results this week, with its 2024s closing at about 10bp tighter today at 450bp.
“The thing we are really looking at this week are the audited numbers from Petrobras, which should shed some more light on the company’s situation and could affect the rest of the market,” said a New York based broker.
Elsewhere, the 7.25% 2018s issued by Brazilian steelmaker Usiminas were trading about a point lower at a cash price of 96.95 Monday after Fitch downgraded the credit to BB from BB+.
As justification for its move, the rating agency cited deteriorating credit metrics on the back of weak steel demand and the oversupply of iron ore.
The company may need to request a waiver on covenants that set net leverage thresholds at 3.5x, just above the current 3.3x, it said.
Meanwhile, in the primary markets, Southern Copper managed to ratchet in pricing on a new 10s/30s trade.
With little supply out of the region this year, investors were keen to get their hands on the investment-grade name even if it was from a commodity sector that has suffered sharp drops in prices this year.
In all the issue saw order books swell to US$8.25bn plus, split between US$4bn on the 10-year and US$4.25bn on the 30-year. The 10 and 30-year bonds were launched earlier at Treasuries plus 205bp and 340bp, respectively. That is 25-35bp tight to initial price talk of 240bp area on the 10-year and 365bp area on the 30-year.
“We haven’t had much of deal pipeline because of all the issues in Brazil, so this will act as a benchmark investment-grade deal,” said a broker.
PIPELINE 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, was in Santiago today, and will head to Switzerland on April 22, New York on the 23rd and Miami on the 24th. 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, mandated Bank of America Merrill Lynch and Nomura for investor meetings that concluded last week 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 Los Angeles today, and will head to 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 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 Natalie Harrison)