18 de mayo de 2015 / 21:55 / en 3 años

Itau bond sale adds momentum to positive session in LatAm

NEW YORK, May 18 (IFR) - Latin American bond markets ended Monday’s session well bid, after Brazilian lender Itau-Unibanco broke a six-month lull in US dollar bond issuance from the country.

The US$1bn three-year bond issue, which priced at a final spread of 190bp over US Treasuries to yield 2.86%, helped boost sentiment across the region, coming on the heels of better-than-expected first-quarter results for Brazilian state-run oil company Petrobras.

The bond marked the first such sale by a Brazilian issuer in the US dollar market since November, when a slew of arrests connected to an alleged bribery scheme at Petrobras rattled the market’s faith in the country’s credit market.

Books peaked at around US$2.5bn on the Itau deal, which most bankers thought came in line with fair value after leads tightened pricing by a good 10bp.

After accounting for a 50bp senior-to-sub differential and a Treasury spread of around 260bp on Itau’s existing sub debt due 2020, bankers put fair value on a five-year at around 210bp, or 190bp for a three-year.

Tight pricing on the Itau trade may encourage more Brazilian issuers to step forth in what is an increasingly favorable backdrop for the country’s credits.

“Bankers are itching for reasons to get (Brazilian credits) to come to market,” said a banker away from the deal. “There have been a few deals, but they haven’t come because of pricing issues.”

This comes as sovereign and corporate credits across the region ended the session between 3bp and 8bp tighter in spread terms as prices held steady in spite of a widening of US Treasury yields.

Bonds issued by Petrobras ended the day between 10bp and 25bp tighter, depending on the maturity, with 2024s and 2044s last quoted at spreads of 395bp-390bp and 430bp-420bp respectively, according to a corporate bond trader in New York.

“It feels like there is cash coming into the market after it got a little oversold last week,” said a sovereign bond trader in New York. “Single-name credit default swaps and indices are doing well.”

Among high-yielders, Argentine bonds appeared to be the outperformers, with US dollar-denominated Pars up 1.5 points in price to 58.75-59.25 and Discounts last quoted at around 99.25, according to the sovereign trader.

Reporting by Davide Scigliuzzo; Editing by Paul Kilby

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