NEW YORK, July 24 (IFR) - Weaker commodity prices and concerns about Brazil’s credit standing continued to plague sentiment in Latin America’s bond market on Friday as miners and oil companies tumbled further.
The selling bias in Brazil continued as investors fretted about the health of the region’s largest economy.
Sovereign debt widened another 8bp while Brazilian corporates were weaker anywhere between 10 to 25bp.
Brazil 2025s, were being quoted at 93.00-93.10, while the 2024s issued by state-owned oil company Petrobras were being spotted at a Treasury spread of 490bp-480bp - a good 60bp off this month’s tights.
“We keep going wider, but we have created a lot of value over the last few days,” said a New York-based trader. “It is pricing in a doomsday scenario and it is a bit overblown.”
Weaker commodities and a strengthening dollar is also exacerbating downward price pressures, impacting bonds issued by miners as well as oil and gas companies.
Chilean copper giant Codelco - which had been expected to issue new debt this month - suffered a decent selloff over the last week on the back of slumping metals prices and concerns about Chinese growth.
It is a similar story for Peruvian tin miner Minsur, whose 2024s were closing about three points lower at 106.00.
Oil and gas name Pacific Rubiales took another blow after Moody’s downgraded its senior unsecured rating to Ba3 from Ba2, with a negative outlook.
The ratings agency cited an expected deterioration in already weak leverage and cash flow metrics on the back of lower oil prices.
The company’s bond slumped earlier this month when Mexican conglomerate Alfa dropped plans to take over the company. the 2021s and the 2025 fell multiple points on the news to hit 72 and 65.00.
Since then those securities have recovered a touch to trade today at 73.65-74.85 and 65.75-66.75, respectively.
Sagicor Financial Corporation, an insurance and financial services provider with operations in the Caribbean and the US, hired JP Morgan and Scotiabank to arrange fixed-income meetings in the US and Europe ahead of a potential US$-denominated 144A/Reg S bond issue.
The meetings will take place in London on July 27, Boston on July 28, Los Angeles on July 29 and New York on July 30. Expected corporate ratings are BB-/B from S&P/Fitch.
Whisper of mid 6% are being heard on a US$750m 7NC3 from Sable International Finance Limited (Cable & Wireless) as it kicks off roadshows via BNP Paribas, JP Morgan, RBC and Scotiabank. Expected ratings are Ba3/B.
Brazilian conglomerate Cosan Overseas has wrapped up roadshows this week after marketing a possible 144A/Reg S bond offering.
Bank of America Merrill Lynch, Bradesco, Itau BBA, Morgan Stanley and Santander organized the meetings. Expected ratings are Ba2/BB/BB+ by Moody‘s, S&P and Fitch.
Brazilian refractory company Magnesita has announced plans to buy back as much as all of its outstanding 7.875% senior notes due 2020 and to modify their terms and remove all restricting covenants.
America Movil (A2/A-/A) and Telesites (expected NR/BBB-/BBB-) wrapped up investor meetings via Citigroup, Inbursa, BBVA and Santander. The meetings were intended to discuss the new Operadora de Sites Mexicanos business and gauge interest for 144A/Reg S deals in Mexican pesos and/or USD.
Banco Santander Chile (Aa3/A/A+) wrapped up meetings via Deutsche Bank and Santander to discuss opportunities in the domestic Chilean markets. (Reporting By Paul Kilby; Editing by Jack Doran)