NEW YORK, May 19 (IFR) - Latin American credits remained well supported Tuesday even as US Treasuries sold off for a second straight day, as upbeat housing data revived expectations of a US rate hike later this year.
Sovereign bond prices closed a quarter to three quarters of a point lower, but held their own against weaker US Treasuries to end the day flat to a touch tighter in spread terms.
“Clients have been trading out of (long) duration (bonds) and into the 10-year sector and that would explain why we are seeing this bigger cushion (in spreads),” said a sovereign bond trader in New York, who argued Colombia, Panama and Peru were the day’s outperformers.
Chile’s sale of EUR1.39bn in bonds split across a tap of its 2025s and a new 15-year note appeared to be well received by investors, with order books on the sale peaking at EUR2.6bn.
“It looks like they left some money on the table,” said the trader.
Corporate credits were also ending the day on a positive note, with spreads as much as 10bp tighter on some names, said a second trader in New York who saw good demand for a number of Brazilian credits.
Bonds of Brazilian state-run oil company Petrobras, however, gave back some gains after tightening by as much as 20bp on Monday. The 2024s, for example, were ending the session some 5bp wider 400bp-395bp over US Treasuries.
Elsewhere in the region, bonds of Colombia’s state oil company Ecopetrol slid one point as weakness in global crude prices weighed on the credit, with its 2025s and 2045s last quoted at 95.0 and 93.5 respectively.
The company said on Tuesday that it would sell its 6.87% stake in energy generator Empresa de Energia de Bogota (EEB) for the equivalent of US$398.9m as part of a plan to shed assets.
Among new issues, Itau Unibanco’s new US$1bn 2018 note traded up by as much as half a point after pricing on Wednesday at 97.971. It later retraced to 100.30-100.35.
Reporting by Davide Scigliuzzo; Editing by Paul Kilby