NEW YORK, March 2 (IFR) - Latin American credits continued to enjoy a strong bid on Monday, with most names in the region ending the day stronger.
With demand from a broad group of investors supporting bond prices, credit spreads were largely tighter against yields in the US Treasury market, where the 10-year benchmark widened Monday by 9bp to 2.09%.
“There are very few sellers and lots of clients have inflows,” said a corporate bond trader in New York. “It’s emerging market (accounts), real money, US and European crossover and retail. Everyone is buying.”
In Brazil, bonds issued by state-run oil company Petrobras and miner Vale were ending the day up to 20bp and 10bp tighter respectively, according to the trader.
Petrobras’s 2024s, for example, closed at a spread of 530bp-520bp, while Vale’s 2022s were ending the day at 270bp-260bp over.
Credits in the beef sector were also performing strongly, with JBS’s 2024s closing up by around a point at 103.0-103.5.
Among the underperformers was Colombia-focused exploration and production company Pacific Rubiales, whose notes lost about a point following a one-notch downgrade by Fitch.
The rating agency, which downgraded the credit to BB and revised its outlook to negative, said the action reflects the effect of declining oil prices on the company’s credit profile.
“If current prices of US$50 a barrel are sustained for the next 24 months, EBITDA margins could decrease to the low 20% level, free cash flow would turn negative and leverage could reach 6.0x-7.0x and result in further negative rating actions,” Fitch said in a note.
Pacific Rubiales’ 2025s were last seen trading at around 65 on Monday, down from 66 earlier in the day, according to the trader.
Among new issues, Mexican cement company Cemex continued to receive good demand for its new 2025s, which closed at around 101.
Mexican telco America Movil is expected to reopen its Global peso-denominated bond due 2024 for up to MXN7.5bn (US$502.5m), according to a Moody’s note.
Proceeds form the sale will be used primarily for debt refinancing as well as for general corporate purposes.
Th company wrapped up meetings with investors in Europe and the US last week via BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley.
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.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale.
Panama filed with the SEC to sell up to US$3.04bn in debt, raising expectations that the sovereign could soon come to the international bond market.
Reporting by Davide Scigliuzzo; Editing by Paul Kilby