8 de junio de 2016 / 20:32 / hace un año

LatAm primary bond markets in busiest week of 2016

NEW YORK, June 8 (IFR) - Latin America’s primary bond markets are on course for their busiest week of the year, with borrowers bringing a slew of new deals amid an upbeat tone for emerging markets assets.

Five trades for almost US$3bn equivalent joined the fray on Wednesday, making for a total of nine deals out this week - easily the most in one week thus far in 2016.

Mexican cement company Cemex jumped in with a EUR400m eight-year bond, while dollar trades followed from Colombian oil credit Ecopetrol, the Province of Buenos Aires, REIT Fibra Uno and Argentina’s Cablevision.

Pulp company Eldorado and conglomerate Cosan are also eyeing dollar financing this week, while Brazilian iron ore miner Vale priced a trade on Tuesday.

The Mexican sovereign is also expected to price a JPY60bn dual-tranche bond on Thursday.

“It is a positive backdrop for EM, particularly Latin America,” said Kathleen Gaffney, a portfolio manager for Eaton Vance’s Bond Fund.

“US Treasury yields are moving lower, the dollar is weaker and EM currencies are stronger. That makes it an ideal time to issue.”

Higher oil prices and a dovish tone from the Federal Reserve after exceptionally weak payroll data have also helped buoy sentiment toward a region heavily reliant on commodity exports.

Crossover accounts are also running into the arms of EM borrowers as they hunt for yield, which has been hard to find elsewhere due to accommodative central bank policies.

ORE RIGHT NOW

The US$1.25bn five-year issue from Vale, its first in more than three years, underscored the new view of EM commodity names that were trading at double-digit yields just a few months ago.

The ore miner’s bond was holding up nicely in the secondary on Wednesday, despite what some thought to be tight pricing.

It was spotted at around 100.75-101.25 after pricing at par to yield 5.875% on the back of a US$4.6bn order book.

“Markets feel great right now post-payrolls,” said a DCM banker. “Vale gave people the confidence to do deals.”

Yet the window of opportunity for issuance could close quickly.

The UK’s referendum on EU membership looming in a fortnight, and concerns remain about growth in China and just when the US Federal Reserve will decide to raise rates.

“There is a fair amount of global uncertainty over Brexit and concerns about China growth,” Gaffney said. “These are risks that aren’t priced into the market.”

Investors are already showing signs of indigestion and some dissatisfaction with primary yields as leads take advantage of buoyant conditions to squeeze pricing levels.

“New issue have gotten very heavy in the last week and deals are pricing with increasingly small concessions,” said Jason Trujillo, a senior analyst at Invesco.

“Order books have been looking increasingly weak, with investors ready to drop on even slight revisions.”

With the exception of Fibra Uno, Wednesday’s deals did appear to come with only modest concessions.

Ecopetrol priced a US$500m tap of its 5.875% 2023s at 101.612 to yield 5.60%, offering a 5bp-10bp concession against recent secondary levels. Books reached US$1.7bn.

Province of Buenos Aires launched a US$500m three year and US$500m 10-year average life bond at 5.75% and 7.875% - flat to guidance of 5.75% and 7.875% (plus or minus 12.5bp)

Pay TV and internet service provider Cablevision came with one of the lowest yields seen out of Argentina so far this year after launching a US$500m five-year non-call three at 6.50%.

Fibra Uno launched a US$200m tap of its 5.25% 2026s at T+345bp and a US$300m reopening of its 6.95% 2044s at T+435bp.

That was at the tight end of guidance but just 10bp and 5bp inside initial price thoughts of T+355bp and T+440bp, respectively. (Reporting by Paul Kilby; Editing by Marc Carnegie)

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