NEW YORK, April 27 (IFR) - EM investors shrugged off worries about Greek debt negotiations and were back in risk-on mode on Monday, sending LatAm credit spreads tighter and bringing more borrowers out of the woodwork.
"Europe was a bit weaker, but there is strength in Latin America at the open," said a New York-based trader. "People keep getting more comfortable about putting money to work in Brazil, and Vale is the bond of choice today."
The Brazilian miner watched its bonds tighten another 10bp across the curve on the back of stronger iron ore prices, though some traders think the rally may have extended too far.
"At these levels it has become a massive sell, especially the belly of the curve," said a second trader. "There has been a short squeeze from crossover accounts."
The company's 2022s were being quoted at around 260bp, while its 2042s were spotted at 440bp-430bp.
Petrobras debt was also inching tighter as a relief rally sent its bonds and other Brazilian corporates tighter after the embattled oil company finally released full-year audited results last week.
This comes after an active week in the primary markets which saw some US$5.5bn in new supply from an eclectic group of borrowers including Argentina, oil company YPF, Chilean utility Guacolda, Paraguay and miner Southern Copper.
The Bonar 2024s, which Argentina tapped last week at 103.00, were largely unchanged Monday morning at 104.25-104.75.
Southern Copper's new 2025s and 2045s were respectively trading at 194bp-189bp and 335bp-330bp, versus re-offer spreads of 205bp and 340bp.
Against the positive backdrop, more deals are expected to emerge, with JB y Compania SA de CV (Jose Cuervo) becoming the latest borrower to join the pipeline. It has mandated Bank of America Merrill Lynch and Citigroup as it seeks to market a possible senior unsecured USD bond.
The borrower will be in London on Wednesday, Boston on Thursday and Los Angeles on Friday. Next week it will be in Chicago on May 4 and New York on May 5. The global spirits company, rated BBB/BBB by S&P and Fitch, is the largest tequila producer in the world.
ACI Airport Sudamerica, the controlling shareholder of the concessionaire of Uruguay's Carrasco airport, is out with price guidance of 7.25% area on a US$200m 2032 senior secured bond ahead of expected pricing tomorrow. Expected ratings on the 144A/Reg S bond are BB+/BB+ by S&P and Fitch. Joint bookrunners are Bank of America Merrill Lynch and Nomura.
Banco Latinoamericano de Comercio Exterior (Bladex), a Panama-based trade bank, will kick off fixed-income investor meetings next week through BAML and Citigroup.
The borrower, rated Baa2/BBB/BBB+, will be in London and Los Angeles today and head to Switzerland and Boston on April 28 and New York and Philadelphia on April 29.
Banco de los Trabajadores (Bantrab) wrapped up roadshows last week after marketing a subordinated debt offering through Deutsche Bank. Pricing is expected next week.
The Guatemalan bank, which focuses on payroll-lending to public sector employees, is approaching investors with up to US$100m of 10-year sub loan participation notes, which are being recognized as Tier 2 capital by local regulators. The bank has corporate ratings of Ba3/BB-.
Pacific Rubiales, the largest private oil producer in Colombia, has kicked off investor meetings through Bank of America Merrill Lynch, Citigroup and HSBC. The company heads to Santiago on April 30, Los Angeles on May 4 and Miami on May 6. (Reporting by Paul Kilby; Editing by Marc Carnegie)