NEW YORK, Feb 23 (IFR) - Latin American credits started Monday mixed as lower oil prices and the Moody’s downgrade of Russia to junk overshadowed any boost from Greece’s last-minute deal with its creditors.
The region’s bond markets were seeing little benefit from improved sentiment in Europe, where shares rose and yields shrunk after Greece’s four-month extension on its bailout.
“I am not seeing follow-on in global risk appetite from Greece,” said a New York-based trader focused on LatAm corporates. “I would have expected (LatAm) to rally hard on the back of that.”
With concerns over Greece temporarily on hold, Uruguay pounced on the opportunity and came to market with its international bond after waiting in the pipeline for weeks.
The South American country, rated Baa2/BBB-/BBB-, is approaching investors with a tap of its 5.1% 2050s after releasing initial price thoughts of 235bp through leads Bank of America Merrill Lynch, Morgan Stanley and Santander.
The sovereign is heard targeting US$1bn and is seen offering a concession of around 20bp, though that is likely to shrink as leads refine guidance. Books were heard at the US$1bn mark earlier this morning.
Meanwhile investors were largely focusing on lower oil prices, which according to Reuters fell more than a dollar today, with Brent futures hitting around US$58.50 a barrel.
Colombia-focused E&P name Pacific Rubiales sunk about a point in response, with its 2019s and 2025s being quoted at 72.50-73.50 and 64.50-65.50, respectively.
The Moody’s downgrade of Russia to Ba1 from Baa3 could also spill over into LatAm due to forced selling from high-grade accounts and any subsequent impact this might have on EM indices, said a trader.
Fed Chairwoman Janet Yellen’s testimony before Congress this week as well as a string of earnings from Latin American companies including Gruma, Mexichem, Coca-Cola FEMSA, Ecopetrol and Milpo also have the potential to move prices this week, he added.
Mexican media company TV Azteca is bringing to market a rare project bond related to the development of the Andean country’s fiber optic network. Pricing is expected toward the end of February.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale that could take place as early as this month.
Panama filed with the SEC to sell up to US$3.04bn in debt, raising expectations that the sovereign could soon come to the international bond market.
Bankers have been awaiting a mandate decision from the sovereign, which sent out requests for proposals earlier this month. (Reporting by Paul Kilby; Editing by Marc Carnegie)