NEW YORK, March 23 (IFR) - Latin American credits continued to grind tighter Monday, with a dovish statement from the Fed last week still encouraging market participants to put money to work.
In spite of the weakness in oil and European equities, CDS on LatAm sovereigns were quoted between 3bp and 6bp tighter in early trading, while cash bonds were also better bid.
“The buying continues,” said a corporate bond trader in New York. “On a relative basis we are still cheap to US high-grade and to Europe.”
Argentine bonds were expected to remain well supported after a US judge allowed Citigroup - the custodian on some US dollar-denominated Argentine-law bonds - to process coupon payments on the notes when they come due on March 31 and June 30.
Argentina’s New York-law Discount bonds opened on Monday at a cash price of 103.50-104.0, while Par notes were quoted at 59.25-59.75, according to a New York broker.
In primary markets, the firmer tone has encouraged Colombia to follow in the footsteps of other sovereigns and raise funds at the long end of its curve.
Colombia has set initial price thoughts of 265bp area over US Treasuries for a maximum US$1bn tap of its 2045s, which would bring the total size to up to US$2.5bn.
Based on the closing price of 101.0-101.5 Friday, equivalent to a G-spread of around 244bp-241bp, the tap is seen offering an initial concession of 21bp-24bp, according to the trader.
The new issue will be closely watched by market participants in light of another Colombian deal expected to price this week: a rare hybrid bond from Colombia Telecomunicaciones.
The company, 70% owned by Spain’s Telefonica SA and 30% by the Republic of Colombia, has set initial price thoughts of mid to high 8% for its upcoming perpetual non-call five bond sale.
The issue is expected to price as soon as Wednesday.
Colombia Telecomunicaciones (ColTel), Colombia’s second-largest telecommunications company, has hired BBVA and HSBC as structuring advisors as well as joint bookrunners along with Citigroup and Credit Suisse to arrange a series of investor meetings in the US, Europe and Asia.
A US dollar-denominated 144A/Reg S hybrid bond transaction may follow. The issuer is rated BB/BB, while the hybrid bond is expected to be rated B+/B. ColTel is 70% owned by Spain’s Telefonica S.A. and 30% owned by the Republic of Colombia. Meetings kicked off last week and will continue until Tuesday.
In Peru, Mexican media company TV Azteca is expected to bring to market a project bond related to the development of Peru’s fiber optic network as soon as this week. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)