21 de julio de 2015 / 20:19 / hace 2 años

LATAM WRAP-Jamaica files bond shelf while Brazil credits suffer

4 MIN. DE LECTURA

NEW YORK, July 21 (IFR) - A Jamaica bond filing and weakness in Brazilian credits on Tuesday were the main focus of attention in a LatAm credit market that has shifted into slow gear as August approaches.

An up to US$3bn SEC shelf from Jamaica, rated Caa2/B/B-, heightened expectations that it would issue bonds soon to retire an equivalent amount of PetroCaribe debt owed to Venezuela.

The government is expected to buy back the approximately US$3bn in debt at a steep discount - at somewhere between US$1bn-US$1.5bn - to make the transaction economical at a time when its 10-year bond is trading at around 5.75%.

As a result, the government hopes to shave some 10 percentage points from its debt-to-GDP ratio, lowering it to around 123% from 133%, according to one analyst

Citigroup recently finished taking the borrower on roadshows and is expected to lead any bond issue that may emerge over the next week or so.

The sovereign is one of the few borrowers left in a pipeline that also includes Brazilian conglomerate Cosan and America Movil's cellular tower spinoff Telesites.

Telesites is expected to prioritize an up to Ps15bn local currency offering that could come as soon as next week - and may follow that trade with a dollar bond sale as well.

Domestic investors are heard doing their credit work and getting approvals on what is still a new company.

Meanwhile, Brazilian credits suffered another down day on Tuesday as the buyside continues to fret about the deteriorating political environment in the region's largest economy.

Brazilian development bank BNDES saw its 2023 bonds tumble about half a point to hit 99.70-100. Debt issued by steelmaker CSN also continues on a downward trajectory amid the deteriorating scenario in Brazil and falling steel prices.

"Yields on CSN bonds are approaching 12%, which is wider than where they were trading during the financial crisis in 2008," said a New York-based trader. "Retail is selling, and no one wants to buy."

CSN 2019s are now being quoted at 84.00-85.00, while its 2020s were being spotted today at 81.00-82.00.

This comes amid increasing support for an impeachment of Brazilian President Dilma Rousseff, and as Finance Minister Joaquim Levy calls for further cuts in the budget to make up for a sharp fall in tax revenues.

Pipeline

Brazilian conglomerate Cosan Overseas has selected banks to take it on a roadshow this week to market a possible 144A/Reg S bond offering.

The company was in Boston and Los Angeles today, and will wrap up in New York and London on Wednesday. Bank of America Merrill Lynch, Bradesco, Itau BBA, Morgan Stanley and Santander are organizing the meetings. Expected ratings are Ba2/BB/BB+ by Moody's, S&P and Fitch.

Brazilian refractory company Magnesita has announced plans to buy back as much as all of its outstanding 7.875% senior notes due 2020 and to modify their terms and remove all restricting covenants.

America Movil (A2/A-/A) and Telesites (expected NR/BBB-/BBB-) have wrapped up investor meetings via Citigroup, Inbursa, BBVA and Santander. The meetings were intended to discuss the new Operadora de Sites Mexicanos business and gauge interest for 144A/Reg S deals in Mexican pesos and/or USD.

Banco Santander Chile (Aa3/A/A+) has wrapped up meetings via Deutsche Bank and Santander to discuss opportunities in the domestic Chilean markets.

Jamaica (Caa2/B/B-) has wrapped up investor meetings 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 Marc Carnegie)

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