19 de junio de 2015 / 18:43 / en 2 años

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.

US Treasury yields were falling as investors sought safe-haven assets, but EM bond funds continued to suffer from outflows, albeit at a much light pace.

EM dedicated bond funds saw some US$200m head for the exits this week versus close to US$800m the prior week, according to banks quoting EPFR data.

Bankers still believe the lack of a supply from LatAm corporates this year has helped maintain demand for new issuance and that this should continue for the near future.

“We have seen a nice technical bid for some corporates,” said a syndicate official. “We have seen the fourth consecutive week of outflows but it is relatively manageable so far.”

PIPELINE

Grupo Posadas started roadshows Friday in Los Angeles through Citigroup, Bank of America Merrill Lynch and JP Morgan ahead of a possible USD 144A/Reg S bond sale.

The company, rated B2/B/B+ by Moody‘s/S&P/Fitch, will see accounts in London on June 22, in Boston on June 23 and in New York on June 24.

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 this week.

The Caribbean island is a part of the Kingdom of the Netherlands. The deal is “supervised” by the Netherlands but does not have an explicit guarantee.

Jamaica has started investor meetings via Citigroup. The country, rated Caa2/B/B-, saw accounts in Boston Friday and will head to London (22), Germany (23) and wind up 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. (Reporting By Paul Kilby)

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