NEW YORK, June 2 (IFR) - A number of LatAm issuers are expected to push ahead with bond offerings next week as they seek to benefit from benign conditions ahead of the Fed meeting and the UK’s EU referendum.
The steadily growing pipeline now includes Brazilian pulp company Eldorado, Argentine pay TV and internet service provider Cablevision and Mexican REIT Fibra Uno.
All are expected to price next week, while market participants say more borrowers should be making an appearance in the coming days.
One syndicate manager said his bank may announce deals next week for three issuers looking to raise a total of US$2.5bn before the June 14-15 FOMC meeting.
“Guys are definitely keeping an eye on the FOMC, and anyone who can do a deal ahead of that will definitely do so,” said another New York-based syndicate manager.
Argentina’s Province of Cordoba meanwhile is moving ahead of the pack, looking to price a five-year bond on Friday despite the potential risk from the morning’s nonfarm payrolls print.
The LatAm market is keeping a close watch on other developments as well, including Federal Reserve Chairman Janet Yellen’s speech on Monday in Philadelphia and her testimony before Congress on June 21-22.
Futures have been lowering the chance of a US rate hike in June, but strong economic data could still change plans.
Thursday’s ADP National Employment Report, which showed private payrolls increasing 173,000 in May, arguably underscored arguments in favor of a rates hike in the near future.
“Things are picking up now that investors’ mood is in a reasonable place,” said a DCM banker. “Let us see what happens with payrolls.”
Uncertainty over the timing of a hike and concerns over the outcome of the UK’s referendum on EU membership on June 23 have bankers encouraging issuers to move forward sooner rather than later.
For now, LatAm bond prices have been surprisingly solid amid further negative headlines out of Brazil, concerns over Chinese growth and an unsteady backdrop for commodities.
Bonds issued by state-owned oil companies were holding their own Thursday even as crude prices dropped about 1% after OPEC member countries failed to set a production cap.
The new 2026s issued by Brazil’s Petrobras were trading at around 95.00, up about one point, while the 2045s of Colombia’s Ecopetrol were about a quarter point higher at 81.00, according to traders.
”The word to describe the market is ‘resilient,’ said a New York-based trader. “Normally OPEC would have caused the market to widen - but it hasn’t at all.”
Traders have been reporting buying activity among both retail and real-money accounts that had been market-neutral.
“Positions are cleaner than they were in May, and people have been flat or slightly on the short side,” said the trader.
“Credit is outperforming, and I have only seen real end users buying.” (Reporting by Paul Kilby; Editing by Marc Carnegie)