NEW YORK, March 31 (IFR) - Latin American credit markets were seeing a mixed start Tuesday as investors squared positions ahead of month-end and took some profits after the recent bounce in prices.
With equities giving back recent gains and crude prices continuing to fall, a slightly more risk-averse tone has pervaded the market Tuesday morning.
This comes as trading activity slows somewhat ahead of the Easter and Passover holidays and amid growing concerns that Argentina's legal battle with holdout investors could impact bonds that had previously been seen as beyond the reach of US law.
"It is quarter-end and it is pretty quiet and a holiday is looming," said a New York-based trader.
The commodity complex and related names were adding some strain on prices among oil names. This morning, Brent was heading toward US$55 a barrel and US crude was hitting US$48.01 as investors anticipated more supply on the back of a possible nuclear deal that would allow Iran to start exporting again.
Bonds issued by Colombia-focused oil name Pacific Rubiales, which suffered wild swings as a result of the rout in crude, were giving back gains after advancing over the last week. Its 2025s were being bid at around 58.60 or some 30ct lower.
Meanwhile Brazilian assets were holding up relatively well despite renewed concerns about the country's deteriorating fundamentals after Reuters reported that Finance Minister Joaquim Levy told the Senate that the country risks losing its investment grade if the government fails to address spending.
Despite that, Brazil's 2025s were being marked slightly higher at a 97.50 bid, while the Real was also gaining ground, falling to 3.21 against the dollar, down from 3.24 seen yesterday. Petrobras 2024s and 2044s were also steady at around 535bp-525bp and 533bp-523bp, respectively.
Elsewhere in the sovereign space, Argentina continued to suffer what has been a rare pullback in sovereign bond prices after clearing houses Euroclear and Clearstream confirmed that they would not process payments on a series local law dollar bonds, including coupons due today on the Pars.
This comes after US judge Thomas Griesa said such bonds should be included in an injunction prohibiting payments unless litigant investors were made whole as well.
Concerns about further fallout from the ruling were exacerbated this morning after Clearstream announced that it would suspend settlement for any security in the Argentine market after its local custodian Citibank recently lost its ability to provide such services.
Mexican media company TV Azteca is looking to pull the trigger on a rare project bond related to the development of Peru's fiber optic network as soon as today.
The senior secured notes will be backed by project cash flows and will be issued by special purpose vehicle Red Dorsal Finance Limited.
Final maturity will now fall in 2031, as opposed to the 2032 originally stated in the preliminary prospectus, while average life will be around 9.5 years. BESI-Grupo Novo Banco and Credit Suisse are the bookrunners on the deal. (Reporting by Paul Kilby; Editing by Marc Carnegie)