14 de octubre de 2015 / 18:23 / en 2 años

LATAM WRAP-Cautious tone prevails in LatAm credit market

NEW YORK, Oct 14 (IFR) - Latin American borrowers remained on the sidelines with concerns about Brazil continuing to keep sentiment subdued and investors averse to taking on more risk.

The 2024s issued by Brazilian oil company Petrobras were drifting lower to be quoted at 78.00, while the 2025s issued by the Brazilian sovereign were back below 90.00.

For now, investors are taking a hands-off approach to Brazil amid heightened talk about possible impeachment proceedings against President Dilma Rousseff.

A Supreme Court ruling on Tuesday prevented opposition parties from forcing a vote to open impeachment proceedings, but house speaker Eduardo Cunha is still analyzing requests to move forward.

“People are looking at how this matter develops to make up their minds about whether they are positive or negative on Brazil,” said a trader.

The risk-off tone has extended to the rest of the market as crude prices slipped again on Wednesday and the yield on the 10-year US Treasury dropped below 2% on global growth concerns.

“It seems like the market is still afraid to show prices,” said the trader. “People are afraid we will revert to where we fell two weeks ago.”

Despite that backdrop, some credits were creeping higher, including Arcos Dorados, the regional operator and franchisee of McDonald‘s.

Fears of its exposure to dollar liabilities at a time when local currency revenues were being hit by a drop in the Real sent the company’s 2023s sinking last month.

The bonds have been inching higher after hitting a low of around 79.75 in early October to trade on Wednesday at 83.75-84.50.

Investors are betting that the borrower will be able to raise more cash through the shedding of assets, said the trader.

“If they are successful in selling assets, I believe investors will step in again,” he said.

Meanwhile, primary markets remain in the doldrums and are likely to stay that way until prices find some sort of equilibrium.

“The pipeline that seemed so robust is withering a bit,” said a banker. “There is still a lot of uncertainty for borrowers.”


Mexican white-goods manufacturer Controladora Mabe has finished investor meetings through Barclays, Bank of America Merrill Lynch, Citigroup and JP Morgan. Ratings are BB+/BB+.

Mexican real-estate investment trust Fibra Uno has completed meetings with investors through Bank of America, Credit Suisse, HSBC and Santander.

Terrafina, another Mexican REIT, has finished meeting accounts as it markets a potential US$400m-$500m bond offering. The borrower mandated Barclays and Citigroup as lead managers, with Itau coming in as co-manager. Expected ratings are Baa3/BBB-.

Brazilian airline GOL Linhas Aereas Inteligentes (B3/B-/B-) has completed roadshow with Morgan Stanley, Credit Suisse and Citigroup. A financing deal may follow, subject to market conditions. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)

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