NEW YORK, Oct 23 (IFR) - A surprise rate cut in China and the prospects of more monetary easing in Europe spurred some risk-on buying in LatAm credit market on Friday.
“Three major central banks are easing - Bank of China, the ECB and the Bank of Japan,” said Jorge Piedrahita, CEO of brokerage Torino Capital. “That provides a good backdrop for risk-on trades.”
Brazil bond prices continued to move higher on Friday despite concerns about the country’s fiscal accounts, the threat of possible impeachment proceedings and the prospect of further downgrades.
The sovereign’s 2025s have jumped about 75 cents to hit a mid-market price of 88.30, or some 1.5 points off the weekly low seen on Wednesday.
While buying activity remains somewhat muted, some investors were looking to gain exposure to stronger names in the country’s protein and pulp and paper sectors, said one US-based trader.
The 2024s issued by Brazilian pulp and paper company Fibria were up one point at 98.50-99.50, while beef company JBS’s 2024s had advanced about half a point to hit 102.25-103.25.
Elsewhere Argentina assets have been catching a decent bid ahead of Sunday’s presidential elections.
Investors were largely shrugging off a US district judge’s ruling on Thursday favoring “me-too” creditors suing the country and instead were betting on an improving political landscape.
The election is likely to mark “the beginning of significant changes” for Argentina and could result in a quick settlement with holdout creditors and renewed access to capital markets funding, said a Barclays note today.
Bonar 2024s were up another 3/4 of a point on Friday at 102.25-102.75.
Elsewhere, investors were in an ambivalent mood over Millicom International, a telco company with assets in Latin America and Africa.
News of improper payments made on behalf of the company’s joint venture in Guatemala has sent its bond prices reeling in recent days. Its 2021s, for example, have fallen a good three points this week to around 97.00.
The company also reported a decline in 3Q revenues due mostly to FX volatility, though it underscored substantial increases in Ebitda excluding local currency depreciation.
“The company was able to increase Ebitda, so it was taken as a good result,” said another trader. “The problem is investors are afraid of the consequences of yesterday’s news (about improper payments).”
Mexican development bank NAFIN kicked off roadshows this week as it looks to market a 144A/Reg S Green bond to international investors through leads Bank of America Merrill Lynch, Credit Agricole and Daiwa.
The state-owned bank will be in Los Angeles and New York areas on Thursday and move to San Francisco and Boston on Friday. It is expected to be rated A3/BBB+ (Moody‘s/Fitch).
Peru (A3/BBB+/BBB+) appointed BBVA, BNP Paribas and JP Morgan to arrange investor meetings in Europe from October 20 to update on the country’s financing program and discuss developments in the economy. A potential transaction may follow.
Mexican white-goods manufacturer Controladora Mabe has finished investor meetings through Barclays, Bank of America Merrill Lynch, Citigroup and JP Morgan. Ratings are BB+/BB+.
Mexican REIT Fibra Uno completed meetings with investors through Bank of America, Credit Suisse, HSBC and Santander.
Terrafina, another Mexican REIT, has finished meeting accounts as it markets a potential US$400m-$500m bond offering. The borrower mandated Barclays and Citigroup as lead managers, with Itau as co-manager. Expected ratings are Baa3/BBB-.
Brazilian airline GOL Linhas Aereas Inteligentes (B3/B-/B-) completed roadshows with Morgan Stanley, Credit Suisse and Citigroup. A deal may follow, subject to market conditions. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)