NEW YORK, June 29 (IFR) - A break-down in Greek debt talks was having a marginal impact on LatAm credit spreads on Monday, but primary market activity is slow as a result.
By late morning bond prices were largely off their lows following an initial knee-jerk reaction to the imposition of capital controls in Greece ahead of tomorrow's payment deadline on debt owed to the IMF.
"At these levels we have customers willing to buy," said a New York based trader. "There is an expectation that any widening will be bought and that some sort of resolution (in Greece) will take place."
Other traders reported little buying activity amid very light flows. "The market is light and real-money really didn't do anything today," said a second trader. "It is really a reallocation of positions rather than buying."
Most participants are awaiting the outcome of a referendum on the Greek bailout proposals scheduled for July 5, and how the US high-grade market will respond to the latest new in Europe.
"Until they go to the referendum, I am not sure we will see much activity," said a DCM banker. "Everyone seems to be in wait-and-see mode."
For now, the visible pipeline for Latin American issuers remains small, though bankers say they have been preparing to launch deals following the July 4 holiday.
Yet while doubts remain about execution in the cross border markets, borrowers appear to have access to local debt financings, at least the larger blue-chip names.
Mexican state-owned oil company Pemex, for instance, is expected to price a multi-tranche reopening as soon as tomorrow after filing for an up to Ps15bn (US$956m) offering on Friday. Citigroup's Banamex, BBVA Bancomer, Bank of America Merrill Lynch and Scotiabank are named as leads in the filing.
The move is part of Pemex's efforts to come to the local market every quarter, much like the sovereign does with its Treasury auction, in an effort to give accounts time to make space for upcoming offerings.
The company is looking to tap an FRN due 2020, inflation-linked 2026s and fixed-rate 2026s, which it recently sold to foreigners as a Euroclearable instrument.
On this occasion, however, the issuer is expected to stick strictly to local accounts given the 2026s are trading below an OID threshold of 97.25. Nor do bankers expect size to reach the full Ps15bn in the filing which is largely designed to give Pemex flexibility to accommodate demand.
Peruvian development bank Corporacion Financiera de Desarrollo SA (COFIDE) has mandated Citigroup, Morgan Stanley and Standard Chartered to roadshow a possible US dollar 144A/RegS bond sale.
The borrower, rated BBB+/BBB+, is in London today and will wrap up in New York on June 30.
Banco Santander Chile has mandated Deutsche Bank and Santander to arrange global fixed-income investor meetings to discuss opportunities in the domestic Chilean markets.
The bank, rated Aa3/A/A+, will be in London on July 6, in Boston on July 7, in New York and nearby on July 8 and 9, finishing up in Los Angeles on July 10.
Jamaica, rated Caa2/B/B-, has wrapped up roadshows via Citigroup. The meetings were 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; editing by Shankar Ramakrishnan)