LatAm borrowers rollout bonds despite softer market
By Paul Kilby
NEW YORK, June 4 (IFR) - Latin American borrowers continued to roll out deals, even as secondary market debt prices struggled to keep up with a rebound in US Treasuries on Thursday.
Yields on the 10-year US Treasury have whipsawed in recent days partly on the back of better-than-expected jobs data, jumping to 2.42% early Thursday, only to end the day at 2.31%.
Against this backdrop, LatAm Airlines moved ahead with the sale of US$500m in 2020s today. The bonds rallied about half a point on the break after leads priced the securities at par to yield 7.25%, exactly in line with IPTs.
Proceeds are going to fund a tender for TAM's 9.5% 2020s, creating a bid for the transaction from investors switching out of the old debt into the new securities.
Mexican state-owned power company CFE also raised MXN9bn (US$579m) on Thursday through a Euroclearable tap of its 7.35% 2025s, which targeted both foreign and local accounts. The bond was priced at 96.583 to yield 7.83% or Mbonos plus 160bp, also flat to guidance.
Meanwhile, after holding up for most of the week, LatAm sovereign debt was showing signs of strain, with Brazil 2025s dropping about three quarters of a point to hit 97.30-97.70.
This follows the Central Bank's decision Wednesday to hike the benchmark Selic rate by another 50bp to 13.75%.
Bonds issued by Brazilian oil company Petrobras also suffered some spread widening with its 100-year bonds and 2024s gapping about 5bp to close at around 525bp-523bp and 415bp-405bp, respectively. Continuación...