NEW YORK, Oct 26 (IFR) - Argentina remained front and center on Monday as the country's bonds rallied amid hopes that a business-friendly candidate might win the run-off presidential election next month.
The country's bond prices were off their highs by late afternoon but still several points above where they closed on Friday.
"This is a real game-changer," one trader told IFR. "It offers the possibility to change a Peronist government that has held power for so long."
The stronger-than-expected support for market favorite Mauricio Macri in Sunday's first-round vote surprised a buyside that had largely been pricing in a more favorable outcome for the ruling party's Daniel Scioli.
Bonar 2024s were closing around 105.50-105.90, up a good four points, while the dollar Discounts were ending the day some 3.5 points stronger at 108.00-110.00, according to one trader.
It was a similar story for quasi-sovereign names such as oil company YPF, whose 2024s hit a high of around 99.75 only to fall back to 99.25 - still three points higher on the day.
Meanwhile in the province of Buenos Aires - where Macri's candidate won the race for governor - the 2021s rallied about five points on Monday to peak at 101.00.
Yet while the tight race has bolstered sentiment toward the South American nation, investors realize that whoever wins the presidency will face significant challenges once in office.
A new government will need to tackle unpopular fiscal adjustments, devalue the currency and quickly cut a deal with holdout investors if it wishes to put the economy back on track.
"This may be a good opportunity to sell," said a second trader. "The (new) president will have serious problems."
Markets elsewhere in the region were largely quiet with the exception of Brazilian telco Oi, whose bond prices surged today on news that LetterOne Group would invest up to US$4bn in the company if it merged with rival TIM.
Oi's 2020s jumped about five points on the news to be bid at 71.00 before falling back to 69.50-70.50 after TIM denied it was in negotiations with Oi, said the trader.
CAF (Aa3/AA-/AA-) will hold a call on Tuesday ahead of a potential euro-denominated Reg S benchmark transaction. BAML, CA-CIB, CS and HSBC are arranging the call.
Mexican development bank NAFIN has finished roadshows ahead of a possible 144A/Reg S Green bond through leads Bank of America Merrill Lynch, Credit Agricole and Daiwa. It is expected to be rated A3/BBB+ (Moody's/Fitch).
Peru (A3/BBB+/BBB+) has wrapped up roadshows through BBVA, BNP Paribas and JP Morgan to update investors on the country's financing program and discuss developments in the economy.
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. (Reporting by Paul Kilby; Editing by Marc Carnegie)