5 de marzo de 2015 / 16:23 / en 3 años

LatAm borrowers emerge on ECB support

NEW YORK, March 5 (IFR) - Latin American credits remained on firm footing Thursday as the European Central Bank prepares to kick off a EUR60bn monthly asset purchase program next week.

While expected, news about the ECB’s quantitative easing has helped the broader tone and encouraged some issuers to come out of the shadows, with both Costa Rica and Kimberly-Clark de Mexico moving forward with bond sales today.

Despite concerns about illiquidity, technicals remain supportive for new issues - and investors have money to put to work.

“(ECB President Mario) Draghi has said he is willing to buy bonds at a negative yield and that has created a bid for Treasuries,” said a New York-based trader.

“Selling pressure at the long-end of Latin American sovereign curves has stopped.”

Costa Rica set initial price thoughts of 462.5bp on a new 30-year bond, providing a decent pick-up to the 410bp-415bp secondary spread seen on the existing 2044s, according to Klaus Spielkamp, a trader at Bulltick in Miami.

“It is a nice premium to the existing bonds,” he said. “The market is clearly liquid and looking for (buying) opportunities, provided that the premium to the existing curve is enough.”

Meanwhile Kimberly-Clark-de Mexico, 48% owned by US-based Kimberly-Clark Corporation, is testing the waters with IPTs of 135bp area on a will-not-grow US$250m 10-year, offering 15-20bp over the company’s existing 2024s.

The A-/A rated high-quality credit is expected to draw a decent crowd, but deal size may give some pause amid ongoing concerns about illiquidity.

“It should be a screaming buy as the existing bonds were trading at 118bp over, but people are scared about liquidity so you might not get some of the fast money types involved,” said the New York trader.

Elsewhere, Brazilian credits were taking a breather with little news to move the market this morning.

Brazilian oil entity Petrobras’s bonds were taking back some earlier spread tightening but only marginally, with prices largely unchanged.

Its 2024s were being quoted earlier today at 503bp-493bp.

Other oil credits such as Colombian state-controlled Ecopetrol were also watching prices drift after taking a beating on poor results stemming from this year’s dramatic plummet in crude prices. Its 2025s were being quoted at 94.50 mid-market.


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.

Panama has 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. (Reporting by Paul Kilby; Editing by Marc Carnegie)

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