NEW YORK, May 1 (IFR) - May Day celebrations made for a quiet trading session in Latin American credit markets where bond prices largely drifted higher Friday amid light liquidity.
This tops off an April that saw some US$12.50bn in new cross-border bond supply from the region, doubling the US$6.3bn in March and bringing the year to date tally to around US$40bn.
Primary activity this month may start more slowly, however.
Mexican drinks company JB y Compania and Brazil’s Votorantim Cimentos are the only names left doing the rounds among investors, though Chile may appear with a driveby this month.
Holidays in several countries on Monday and the release of US payroll data on Friday mean that borrowers have a narrower window for issuance next week.
“Given the move in rates this week, people will want to come back on Tuesday to see how the market is behaving,” said a banker.
Friday saw another jump in US Treasury yields as investors continued to cut exposure to safe haven assets in the US and Europe. The yield on the 10-year US Treasury stood at around 2.12% by early afternoon, marking a 21bp move since a week ago.
For now recently minted issues were holding their own, with Bladex’s new five-year bond quoted around 170bp after pricing Thursday at plus 190bp.
Meanwhile, the Dominican Republic’s 2025s and 2045s were quoted at wide bid-offer spreads of 102.25-103.75 and 104.00-105.50, respectively. Those bonds were tapped Thursday for a combined US$1bn at 102.835 and 104.567.
Elsewhere in the Caribbean, Trinidad’s 2024s were down close to a point at a mid-market price of around 107.00 after Moody’s downgraded the government’s bond rating Thursday to Baa2 from Baa1 with a negative outlook.
Justifying the move, the rating agency cited persistent fiscal deficits, the impact of declining oil prices on the energy exporter and a weak macroeconomic framework.
Chile could soon return to international capital markets with a new bond deal after sending requests for proposal to banks earlier this month, according to three sources with knowledge of the situation.
The sovereign, rated Aa3/AA-/A+, is expected to raise at least US$1bn-equivalent through the deal, which could materialize as soon as next week, one of the sources said.
Votorantim Cimentos (Baa3/BBB/BBB) has mandated Citigroup, Deutsche Bank, HSBC, Banco Votorantim, BB Securities, Bank of America Merrill Lynch, MUFG and Santander GBM to arrange a series of investor meetings ahead of a potential euro-denominated bond issue.
The meetings will take place in Frankfurt and Munich on May 4, London on May 5, and Amsterdam and Paris on May 6.
JB y Compania SA de CV (Jose Cuervo) kicked off fixed-income investor meetings this week through Bank of America Merrill Lynch and Citigroup as it seeks to market a possible senior unsecured US dollar bond.
The borrower was in Los Angeles today and will head to Chicago on May 4 and New York on May 5. The spirits company, rated BBB/BBB by S&P and Fitch, is the world’s largest tequila producer.
Pacific Rubiales, the largest private oil producer in Colombia, has kicked off investor meetings through Bank of America Merrill Lynch, Citigroup and HSBC. The company heads to Santiago on Thursday, Los Angeles on May 4 and Miami on May 6. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)