Feb 11 (IFR) - - Latin American credit markets were opening mixed Wednesday as investors bought Brazilian assets on the cheap but sold Venezuelan bonds.
Brazilian oil entity Petrobras saw its bonds holding steady despite another slide in crude prices today, with 2016s, 2024s and 2044s being quoted at 540bp, 550bp and 560bp, respectively.
Meanwhile Banco do Brasil perps were roaring back to life after steep declines over the last week, with its 9% perps jumping to a high of 80.00 today after trading at 77.00 Tuesday.
“Banco do Brasil has dropped 10pt over the last week and today they are up three points,” said a New York-based trader. “We have seen some real-money accounts buying the credit.”
This comes after analysts at Citigroup yesterday put out a report saying that the recent recovery in oil prices underscored just how expensive Brazilian quasi-sovereign banks were.
State-owned banks were trading too tight to the sovereign when compared to Russian credits, and too tight to Petrobras as well, Citigroup said.
Meanwhile Odebrecht - one of several construction firms under investigation for corruption connected to contracts with Petrobras - was also catching a bid and coming off recent lows. The long-end of its curve rallied several points this morning, with the 2042s jumping to a 67 bid.
“They are very cheap,” said the trader. “This was a falling knife, but now we are seeing some demand.”
Venezuela, in contrast, was bearing the brunt after another tumble in crude and amid disappointment over FX measures that markets largely saw as insufficient to address its fiscal woes.
In the primary market, activity has slowed ahead of blackout periods with the exception of the City of Buenos Aires (Caa2/CCC-/CCC), which is out with initial price thoughts of 9.25% area on a six-year bullet. Pricing is expected today through leads Bank of America Merrill Lynch, HSBC and JP Morgan.
Grupo Senda Autotransporte, a Mexican bus transportation company, has finished roadshows ahead of a possible USD 144A/Reg S bond offering. Expected ratings are B/B (S&P/Fitch). CS and JP Morgan are active bookrunners, and BBVA passive.
Mexican media company TV Azteca is bringing to market a rare project bond related to the development of the Andean country’s fiber optic network. Pricing is expected toward end of February.
Costa Rica aims to announce bank mandates for an up to US$1bn international bond issue by week’s end, Juan Carlos Quiros Solano, the country’s head of public credit, told IFR. The government has been authorized to raise between US$500m and US$1bn but has yet to decide on terms. (Reporting by Paul Kilby; Editing by Marc Carnegie)