NEW YORK, Sept 18 (IFR) - LatAm credit markets were inching wider in light trading on Friday, as bankers braced for a revival in issuance next week after the Fed stalled a lift-off in rates.
The anticlimactic conclusion to the FOMC meeting on Thursday left somewhat deflated traders hoping that a reactivated primary market will invigorate secondary volumes.
“A lot of people are fed up with the Fed,” said a New York-based trader, explaining the drop in volumes.
“Its decision was a buzz-kill, and nothing is moving today. New issues are what this market needs.”
Bankers are certainly spying at least a short-term window for issuance - before the markets once again start speculating about the timing for US monetary tightening.
“It is a very clear window to issue into, but it feels like it will be temporary,” one syndicate banker told IFR.
“Uncertainty and volatility could return in two weeks, with the release of the next payroll numbers.”
Meanwhile borrowers are already lining up to pull the trigger next week.
Mexican white-goods manufacturer Mabe become the latest corporate to join an eclectic pipeline that includes Brazilian airline GOL, Argentina’s Province of Neuquen, the Panama Canal Authority, Costa Rican Airport operator Aeris and two Mexican REITs.
Falling Treasury yields may improve all-in borrowing costs, but bankers still see potential for volatility as concerns about global growth and commodity prices continue to weigh on emerging markets.
EM-dedicated bond funds saw more outflows during the week ended September 16, with some US$1.9bn exiting the asset class over that period, according to UniCredit, citing EPFR data.
“In theory next week could be a window for issuance,” said another syndicate manager. “But it will be dependent on what happens from a macro perspective.”
Brazilian assets remain under pressure, with Petrobras bonds down about a quarter point on Friday at 77.25-77.875.
“People were looking for a better reaction from the Fed,” said another trader focused on Brazilian credit. “I see selling into strength.”
Mexican white-goods manufacturer Controladora Mabe will start fixed-income investor meetings next week through Barclays, Bank of America Merrill Lynch, Citigroup and JP Morgan.
The issuer will be in London on September 21, in Boston on September 22, in New York and Los Angeles on September 23 and in New York again on September 24. Ratings are BB+/BB+.
Aeris Holding Costa Rica, the operator of the Central American country’s main airport, is preparing an approximately US$127m bond sale, according to Moody‘s.
The agency, which assigned a provisional Ba2 rating to the deal, said proceeds would refinance loans extended by shareholders, the Overseas Private Investment Corporation and the IDB.
The Province of Neuquen, the third-largest oil-producing and the largest gas-producing province in Argentina, has mandated Deutsche Bank and JP Morgan to arrange a series of fixed income investor meetings.
A USD-denominated 144A/Reg S senior secured capital market transaction (secured by gas royalties) may follow.
Panama’s Canal Authority (ACP) has kicked off investor meetings through Bank of America Merrill Lynch as it looks to market a US dollar 144A/Reg S bond.
ACP, the entity in charge of the operation and expansion of the Panama Canal, is in Boston on Friday and wraps up in London on Monday. The issuer is rated A2/A-/A.
Mexican real-estate investment trust Fibra Uno has wrapped up meetings with fixed-income investors through Bank of America, Credit Suisse, HSBC and Santander.
Terrafina, another Mexican REIT, has also finished meeting accounts as it markets a potential US$400m-$500m bond offering.
The borrower has mandated Barclays and Citigroup as lead managers, with Itau coming in as co-manager. Expected ratings are Baa3/BBB-. Both REITs could tap the market this week. (Reporting by Paul Kilby; Editing by Marc Carnegie)