NEW YORK, May 6 (IFR) - Order books on the US$500m 10-year debut trade from Jose Cuervo, the world’s largest producer of tequila, swelled to around US$5bn early on Wednesday despite a challenging backdrop of weaker US Treasuries and equities.
Leads Bank of America Merrill Lynch and Citigroup have launched the deal at 165bp over Treasuries, the tight end of guidance of 175bp over Treasuries (+/-10bp), and well inside IPTs of 200bp area.
“We have been well bid all week and we are still well bid this morning,” said a New York based trader. “No one is concerned about Treasuries. We haven’t seen any outflows and people have money to put to work.”
This comes as the yield on the 10-year Treasury reaches 2.23%, its highest level since March 9, after retreating from its session high on the back of weaker than expected ADP payroll data.
Still the ongoing recovery in crude prices, as well as other commodity prices, has certainly helped sentiment in a region still reliant on commodity exports.
Brent and US crude prices were moving higher to hit US$69.12 and US$61.99, respectively, earlier Wednesday, pushed by falling US crude stocks and the conflict in the Middle East.
Venezuelan debt prices were once again heading higher, with the sovereign’s 2022s being quoted at 57.00-59.00, up several points from last week’s levels.
Spreads on bonds issued by Brazilian state-owned oil company Petrobras were also inching tighter with its 2024s and 2044s being quoted at 416bp-406bp and 425bp-435bp.
Pacific Rubiales, Colombia’s largest private oil producer, is also enjoying a multi point rally on news that Mexican conglomerate Alfa and Harbour Energy have agreed to buy the company for about US$5bn equivalent.
The company’s 5.625% 2025s were being quoted at around 86.00-88.00 on Wednesday, up from around 72.00 before the news moved bond prices higher late Tuesday. Those bonds were trading as low as 57.00 in mid-March.
Thursday: Votorantim Cimentos (Baa3/BBB/BBB) with new EUR benchmark seven-year bond. Citi, DB, HSBC, Banco Votorantim, BB Securities, BAML, MUFG, Santander GBM. Investor meetings finish today in Amsterdam and Paris.
Possible this week: Chile (Aa3/AA-/A+) could raise at least US$1.26bn-equivalent. RFPs sent to banks earlier this month. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)