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NEW YORK, June 12 (IFR) - Latin American credit was taking a bit of a breather Friday after a relatively heavy supply week as US rate concerns and another bout of outflows in EM made investors cautious.
Volatility in the US Treasury market has yet to rein in the recent surge in LatAm bond sales, though it has complicated execution.
This week the region saw close to US$4bn in new supply, bringing the new issue tally to around US$7.6bn for June so far.
Yet while the primary markets have been active, supply remains sparse in historical terms and this continues to help provide a decent technical bid for LatAm assets, said bankers.
"We have seen an uptick in supply, but it has been slow for a long stretch so it is still pretty manageable," said a syndicate official.
Most recently minted new issues are also holding up, at least on a price basis. Banco Agricola's new 2020s saw a decent amount of volume Friday when it jumped to 101.75-102.25 after printing at par Thursday to yield 6.75%.
Meanwhile, Metro Lima's new secured 19-year bond has advanced a point to trade at 101.00-101.50 Friday, though the new 10-year from Brazilian aircraft manufacturer Embraer was back down at around reoffer at 99.70-100.00.
Mexican utility CFE was trading Friday at 101.00-101.50, up a couple of points from reoffer, though at a 295bp spread, it was trading essentially flat to where it came at 300bp over.
Nevertheless, with FOMC meetings scheduled for next week and emerging markets continuing to suffer from outflows, the tone remains cautious.
EM bond funds saw US$795.79m in outflows during the week ending May 10, according to UniCredit, citing EPFR data. Over the last three weeks, investors have pulled some US$1.70bn from the asset class, though year-to-date inflows are still positive by US$2.38bn, it added.
"The sharp move higher in rates across both USD and EUR curves has shaken investor confidence in fixed income markets," analysts at Standard Bank noted.
This comes as the LatAm sovereign debt was showing some renewed strength Friday as US Treasuries recovered a touch from this week's rout. Brazil 2025s are back up at a mid-market price of around 97.00, up from the 95.80 seen on Wednesday.
It is a similar story for the Mexico 2025s which have bounced back to a mid market price of 98.24 after dipping to 96.70 earlier in the week.
The Government of Aruba, rated BBB+ by S&P and BBB- by Fitch (both stable) has mandated Credit Suisse and Raiffeisen Schweiz to lead a roadshow in Switzerland in the week of 15 June.
The Caribbean island is a part of the Kingdom of the Netherlands, and is "supervised" by the Netherlands but does not have an explicit guarantee.
Jamaica is readying investor meetings in Europe and the US through Citigroup, according to an investor. The Caribbean nation, rated Caa2/B/B-, will see accounts in Los Angeles on June 16, in New York on June 18, in Boston in June 19, in London on June 22, in Germany on June 23 and in Amsterdam on June 24.
Meetings are being described as a non-deal roadshow, but markets have been expecting the sovereign to raise funding to retire a PetroCaribe loan owed to Venezuela.
Utility AES Panama, rated BB-/BB+, will hit the road next week through Deutsche Bank and Banco General to market a possible 144A/RegS senior unsecured bond.
The company will visit accounts in Santiago and London on June 15, in New York and the West Coast on June 16 and the West Coast and Boston on June 17. Proceeds are expected to finance a tender for US$300m in outstanding 6.35% 2016s.
AES Panama is the country's largest electricity generation company. Panama (Baa2/BBB/BBB) owns 50.4% of the company, while AES Corporation (Ba3/BB-/BB-) holds a 49% stake. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)