NEW YORK, April 1 (IFR) - Latin American bonds ended Wednesday’s session generally better bid, with Brazilian state-run oil company Petrobras outperforming after it announced a US$3.5bn financing deal with China Development Bank.
The rally, one of the strongest enjoyed by the Brazilian company of late, prompted several accounts to book profits, taking spreads off intra-day tights.
Petrobras 2024s were ending the day roughly 20bp tighter, quoted at a spread of 500bp-490bp, but it was the short-end of the curve that saw the most impressive price action.
Albeit more illiquid than longer dated notes, Petrobras 2016s tightened 130bp on the day to a spread of 415bp-420bp, restoring the curve’s upward slope.
“(The deal with China) is another source of financing and people were not predicting that,” said a corporate bond trader in New York. “It releases funding pressure going forward.”
Elsewhere in the country, telecom Oi saw its bonds drop even as its stock rallied by nearly 16% after the company announced a new cost-cutting plan as part of an effort to bring down personnel-related expenses by nearly 20%.
Oi’s 2022s were last quoted at 80.90-81.25, while its 2020s were spotted at 86.0-87.0, both down by roughly a 1.25 points, according to the trader, who attributed the downward move on the bonds to profit taking.
In the high-yield space, a 7.375% 2021 note issued by Caribbean-focused telecom Columbus International jumped by 2.5 points to a bid price of 107.25 after Cable & Wireless Communications (CWC) announced it had finalized the US$1.85bn acquisition of the company .
Other high-yield credits in the region ended the day around half a point higher supported by an overall positive tone, said a second trader in New York.
PIPELINE Pacific Rubiales, the largest private oil producer in Colombia, has hired Bank of America Merrill Lynch, Citigroup and HSBC to arrange a series of fixed-income investor update meetings in the US, Europe and Latin America between April 8 and May 6.
The meetings will take place in London on April 8 and 9, Switzerland on April 10, New York on April 13 and 14, Boston on April 15, Santiago on April 30, Los Angeles on May 4 and Miami on May 6.
Reporting by Davide Scigliuzzo; Editing by Paul Kilby