NEW YORK, Oct 30 (IFR) - LatAm credits continued to find support on Friday as crude prices rose and weak consumer spending data raised doubts about the Fed's willingness to hike rates in December.
While EM debt funds suffered another week of outflows, substantial inflows into US high-yield bond funds were seen as an indicator of improving risk sentiment.
"Accounts are more constructive around emerging markets and you saw a huge inflow into high-yield, which normally benefits us," said a trader of EM bonds.
In Brazil, corporates were largely outperforming the sovereign, with bonds issued by state-controlled Petrobras up between a quarter to half a point.
The company's 2024s were trading above 80 cents on the dollar for the first time in over a month, quoted on Friday at 80.25-81.00.
"We are seeing investors selling sovereign debt to buy corporates, which is generally a bullish trade," said the trader.
Still, many Latin American corporates are having to contend with the fallout from weaker currencies and the impact it has had on their debt levels.
This includes Brazilian steelmaker Gerdau, which plans to raise R$1.24bn (US$319m) through an equity sale designed to pay down debt.
The company's 2024s barely budged on the news to trade at around 84.00-85.00, though the move is seen as credit positive.
Mexican infrastructure company ICA also suffered losses last quarter as financing costs rose due to the weaker peso. This week the borrower hired Rothschild to explore ways to improve liquidity and reduce leverage.
The move raised speculation that a debt restructuring is on the cards, but ICA denied any intention to declare bankruptcy.
But the market is certainly pricing in the worst-case scenario for ICA, as its 2024s tumbled another four points on Friday to hit 28.00.
"If they didn't have exposure to dollar debt, they would have done well," said Klaus Spielkamp, head of fixed-income sales at Bulltick.
Meanwhile, with a more stable backdrop, bankers are preparing to announce roadshows next week after state-owned development bank Nafin printed a US$500m five-year Green bond on Thursday at 99.822 to yield Treasuries plus 190bp.
"The market is there but it has to be a name that investors are comfortable with," said a syndicate banker.
Chilean financial institution Tanner kicked off fixed-income investor meetings as it looks to market a possible 144A/Reg S bond sale through Bank of America Merrill Lynch and JP Morgan.
Roadshows finish on November 4. Expected ratings are BBB- by S&P and Fitch. The company is considering a US$300m five-year senior bond, according to Fitch.
CAF (Aa3/AA-/AA-) held a call on Tuesday ahead of a potential euro-denominated Reg S benchmark transaction. BAML, CA-CIB, CS and HSBC arranged the call.
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)