NEW YORK, Nov 9 (IFR) - LatAm debt markets started the week on a softer note Monday as investors digested the increasing possibility of a US rate hike in December following last week’s strong payroll numbers.
“Everyone in LatAm is a little unconformable with the US hiking rates and the effect this will have on currencies,” said a trader. “Everyone is starting to protect their gains or want to get out at these levels.”
Broader risk-off sentiment bodes less well for issuers that may be looking to leap through what is likely to be the last window of opportunity this year.
This includes Chilean financial company Tanner, which was forced to delay the sale of a five-year US$300m on Friday after US Treasury yields widened in the wake of the jobs print.
The yield on the US Treasury was around 2.34% earlier on Monday, up from 2.02% about two weeks ago.
Tanner released initial price thoughts of 5.5% area on Friday and had been expected to set guidance Monday, but more deal details have yet to emerge, say market participants.
“It is a smaller (financial entity) and is perhaps more susceptible in a weakening economic cycle than the average commercial bank,” said a banker away from the deal.
“I don’t know if it is a matter of price, or if it is the kind of name that people don’t want to buy in this environment.”
Overall the region’s bond markets were slipping lower on Monday as investors looked to protect profits before the close of the year.
Brazil again bore the brunt of the sell-off, led by Samarco Mineracao, the Brazilian iron ore mine jointly owned by Vale and BHP Billiton.
The company’s bond prices have suffered a 20-point drop since Thursday, when a dam burst at the mine and caused widespread destruction in the state of Minas Gerais.
The 2022s were trading at around 60 cents on the dollar earlier on Monday. BHP’s CEO flew to Brazil on Sunday.
“BHP Billiton will continue to work with Samarco (operator), Vale, the local communities, local authorities, regulators and insurers to assess the full impact of this tragic incident,” the company said in a statement.
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.
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)