Lima Metro hogs limelight in soft market

miércoles 10 de junio de 2015 17:24 GYT

By Paul Kilby

NEW YORK, June 10 (IFR) - Softness in the credit market did not discourage Lima Metro Line 2 from adding to the recent surge in primary activity on Wednesday when it printed a US$1.155bn 19-year bond.

Lima Metro priced its bonds at par to yield 5.875%, the tight end of guidance of 6% area (+/-12.5bp). The deal was helped by US$700m in reverse enquiry, but demand grew to a little over US$2.5bn amid interest from crossover account and investors from other Latin American countries.

"I had clients asking about Lima Metro from different places, including Brazilian issuers who don't usually look outside the country," said a broker.

The bonds are backed by Peruvian government obligations that would cover any shortfalls in project collections, essentially eliminating construction and performance risks.

Peruvian projects have priced similarly structured deals before but not as large as this one.

The bonds, rated Baa1/BBB/BBB, have a weighted average life of 12.8 years. Investors were attracted by the pick up to the Peruvian sovereign curve, where the 2025s have been trading at 3.75%.

Secondaries, however, were putting in a mixed performance with sovereign debt prices continuing to fall as concerns about rate hikes in the US weighed on sentiment.

Brazil 2025s were closing at 95.55-96.00, marking a two point drop since the beginning of the month.   Continuación...