Brazil hogs limelight as Itau brings dollar trade

lunes 18 de mayo de 2015 11:53 GYT

By Paul Kilby

NEW YORK, May 18 (IFR) - Brazil was leading LatAm credit markets higher Monday following a rally in state-controlled Petrobras and a new issue from Itau-Unibanco - the country's first dollar bond of the year.

While a reversal in US Treasury gains dampened strong buying activity earlier in the morning, the tone remains positive for the region.

Stronger-than-expected first quarter results sent Petrobras's bond curve some 15-20bp tighter this morning after the embattled oil company reported a 50% year-on-year jump in Ebitda.

"We had a lot of demand for Petrobras this morning," said Klaus Spielkamp, head of fixed-income sales at Bulltick. "This is what everyone wants to see. They are lowering capex and leverage and increasing Ebitda. It is all good in credit terms."

Board approval for an up to R$3bn (US$994m) local bond issue was also seen as a positive despite concerns about high leverage. "It is debt neutral as they are refinancing debt (with the local bond)," said a New York syndicate manager.

Brazilian sovereign debt was also enjoying a stronger bid with the 2025s being quoted at 98.50-98.90, up from the 97.65 mid price low seen last week.

This comes as Brazilian bank Itau-Unibanco approaches investors with the country's first dollar bond of the year - a three-year benchmark size offering with initial price thoughts set in the low 200s over US Treasuries.

Pricing is expected later today through bookrunners BB Securities, BAML, Citigroup, Itau BBA and Santander.   Continuación...