27 de octubre de 2015 / 19:44 / en 2 años

LATAM WRAP-Peru returns to euro market after 10-year hiatus

NEW YORK, Oct 27 (IFR) - Peru returned to the euro market for the first time in over 10 years on Tuesday with a EUR1.1bn long 10-year bond as the Andean nation sought to prefund and diversify its investor base.

Order books of around EUR3.8bn allowed leads BBVA, BNP Paribas and JP Morgan to tighten pricing by up to 30bp over the course of the day.

After initially testing investor appetite with talk of mid-swaps plus 215bp-220bp, leads set final guidance at 205bp-210bp before pricing at 99.998 with a 2.75% coupon to yield 190bp over.

Peru has been absent from the euro market since October 2004, when as a low Double B issuer it printed an EUR850m 7.5% 10-year bond at mid swaps plus 355bp.

The Andean nation’s credit standing has strengthened substantially since then with ratings now on par with Mexico‘s, or A3/BBB+/BBB+.

Today’s final spread reflects such changes, though the deal came wide to Mexico’s outstanding 2024s which were being quoted at 150bp over mid-swaps.

It also came wide to its dollar curve. One banker calculated the coupon on the new euro deal was about 4.50% in dollars or some 250bp over Treasuries.

That stands about 40bp wide to where a new dollar 10-year might come, he said.

Such arguments, however, have proven less forceful for sovereigns looking to navigate what has been a tough market for EM issuers.

Public credit teams are putting greater value in diversifying their investor bases as they seek to cover rising funding needs following this year’s sharp decline in commodity prices.

Issuers also like the eye-catchingly low yields in a European market still enjoying the impact of the ECB’s quantitative easing program.

“They are not getting anything tighter than dollars, but it is a play on diversification and lower nominal funding costs,” said a syndicate manager.

The sovereign (A3/BBB+/BBB+) has already funded its 2015 budget and had already pre-financed a portion of its 2016 needs through a US$1.25bn sale of a new 2027 bond in August.

Interest in the deal came from a broad group of investors, say sources, with accounts from Europe, Asia and the US all participating.

PIPELINE

CAF (Aa3/AA-/AA-) held investor calls today 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).

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 Shankar Ramakrishnan)

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