NEW YORK, July 23 (IFR) - Jamaica was poised to raise US$2bn through a dual-tranche bond sale on Thursday, adding much-needed supply to what has been a lackluster primary market in Latin America.
The offering, which consists of 2028 and 2045 bonds, saw order books swell to around US$4.5bn as investors took a shine to a deal offering a nice pick-up to the sovereign's curve.
The healthy demand allowed leads to squeeze pricing on the longer-dated tranche by a good quarter point before launching a US$650m 2045 to yield 7.875%, the tight end of 8% area guidance and inside initial talk of 8.25% area.
Jamaica, Caa2/B/B-, is also set to garner US$1.35bn from the 2028, which was launched at 6.75%, the lower end of 6.75%-6.875% guidance and inside preliminary talk of high 6s-7%.
The decision to load up on the shorter but less expensive tranche made sense as the sovereign is using proceeds in part to retire approximately US$3bn of PetroCaribe debt owed to Venezuela at a steeply discounted price of US$1.5bn.
The liability management transaction is part of the government's efforts to improve its credit metrics as it undergoes a fiscal adjustment program.
Debt to GDP would have dropped from 136.7% to 126.3% for fiscal year 2014-2015 if the debt had been retired earlier this year, according to an investor presentation.
Seen as an improving credit story, Jamaica has enjoyed recent upgrades from both S&P and Moody's, which now rate the sovereign at Caa2 (Positive) and B (Stable).
"(International) investors are underweight Jamaica and it has been one of the best performing counties in the EMBIG index over the last few months," the investor said.
The bond was seen as priced to sell - even after leads pushed yields lower.
At a final yield of 6.75%, the 2028 is offering a approximately 87.5bp of pick-up from where the sovereign's 7.625% 2025s trade.
It is a similar story with the new 2045, which is being priced some 112.5bp wide to the existing 8% 2039s.
Elsewhere it was another tough day for Brazilian credits, which widened another 15bp-20bp after the government announced revisions to its primary surplus targets.
"(The cuts) raised questions not only about Brazil's very short-term fiscal standing but also its ability ... to implement the needed fiscal consolidation to avoid a downgrade to junk," Nomura analysts wrote today.
The dour mood in Brazil has thrown into question the timing of a bond deal from Brazilian conglomerate Cosan, which wrapped up roadshows Wednesday but has yet to announce any deal terms.
Sagicor Financial Corporation, an insurance and financial services provider with operations in the Caribbean and the US, hired JP Morgan and Scotiabank to arrange fixed-income meetings in the US and Europe ahead of a potential US$-denominated 144A/Reg S bond issue.
The meetings will take place in London on July 27, Boston on July 28, Los Angeles on July 29 and New York on July 30. Expected corporate ratings are BB-/B from S&P/Fitch.
Whisper of mid 6% are being heard on a US$750m 7NC3 from Sable International Finance Limited (Cable & Wireless) as it kicks off roadshows via BNP Paribas, JP Morgan, RBC and Scotiabank. Expected ratings are Ba3/B.
Brazilian conglomerate Cosan Overseas has wrapped up roadshows this week after marketing a possible 144A/Reg S bond offering.
Bank of America Merrill Lynch, Bradesco, Itau BBA, Morgan Stanley and Santander organized 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-) 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+) wrapped up meetings via Deutsche Bank and Santander to discuss opportunities in the domestic Chilean markets. (Reporting By Paul Kilby)