Odebrecht bonds spiral south on executive arrest
NEW YORK, June 19 (IFR) - Multi-point price drops in bonds issued by Odebrecht dominated LatAm credit markets' attention on Friday following news that the Brazilian construction firm's CEO had been arrested.
The move marked the first time an Odebrecht executive had been detained by the police in connection with the kick-back scandal embroiling state-owned oil company Petrobras and linked the firm closer to the so-called "Car Wash" scandal.
The company's bonds were marked down about 10 points immediately following the news, but have since come off their lows to trade some four points weaker on the day, traders said.
The construction firm's 4.375% 2025s and 5.25% 2029s were being quoted at a mid-market price of around 80.00 by early afternoon.
Odebrecht bonds backed by drillships on charter to Petrobras also suffered similar price swings with the 6.625% 2022s being spotted at around 78-79.00.
The illiquid 2018s issued by construction firm Andrade Gutierrez, whose CEO was also reportedly arrested earlier today, took a similar hit to be quoted at a wide bid offer of 75.00-78.00.
Fears that even more companies could get caught up in the scandal weighed on the Brazilian bond complex Friday, with petrochemical credit Braskem's 5.75% 2021s tumbling about three points to be bid at 95. Petrobras bonds were also ending up 8bp wider with the Century bond spotted at 520bp-515bp.
Elsewhere in Latin America, markets were seeing a quieter day as investors and borrowers continued to digest this week's dovish Fed statements and possible outcomes for Greek debt talks.
Utility AES Panama's recently minted 2022s was catching a bid to trade about 50ct above reoffer after being priced Thursday at par to yield 6% on the back of a US$850m book. Continuación...