NEW YORK, May 27 (IFR) - LatAm credits underperformed on Wednesday as pessimism over Brazil’s economic outlook and a Russian ban on its beef products weighed on the country’s debt prices.
“We basically underperformed the rally in rates and equities,” said a New York based trader. “The bid for duration was very weak despite the rates rally.”
Yields on longer dated US Treasury shrunk Thursday on continued concerns over Greek debt negotiations, leaving the 30-year benchmark dropping to a two and a half week low to 2.87%.
The Brazilian sovereign’s benchmark 2025 fell back to a mid-market price of around 98.75 on expectations the country suffered an economic contraction during the first quarter, setting the stage for more pain to come.
Brazilian meat producers also watched their bonds sink Wednesday following reports that Russia would ban imports from 10 of the country’s processing plants.
The country’s largest meat producer JBS’s bonds suffered a one point drop on the news but its new 5.75% 10-year were still at 101.10, or point over where they priced last week.
Uncertainty over Brazilian economic performance has not stopped the country’s issuers from planning bond deals.
Aircraft manufacturer Embraer has become the fifth Brazilian corporate to approach investors since Petrobras released its full-year results in late April.
Embraer, rated Baa3/BBB, has mandated Citigroup and Morgan Stanley to coordinate roadshows that will take place in the UK and US between May 29 and June 2 ahead of a possible SEC registered bond offering.
Elsewhere, the Province of Buenos Aires’ 10.875% 2021s were down at 103.75 following local news reports about a possible delay in an upcoming issue to refinance an October maturity.
La Nacion reported the country’s finance minister had yet to sign off on the new bond offering. This comes amid talk that the province’s governor Daniel Scioli may be losing support from President Cristina Fernandez de Kirchner in his bid to run for president during the October elections.
LatAm Airlines marketing a potential senior unsecured bond offering and to tender for TAM’s 9.50% 2020s. The company was in London today and will head to Boston on May 28 and Los Angeles on May 29. The following week it will be in New York on June 1 and 2, leaving June 3 open for conference calls.
Ratings are Ba2/BB/BB- by Moody‘s, S&P and Fitch. The deal is being done in conjunction with a tender offer and consent solicitation for US$300m in outstanding 9.50% 2020s issued by TAM.
Citigroup and JP Morgan are acting as global coordinators as well as joint bookrunners along with Bank of America Merrill Lynch, BTG Pactual, Credit Agricole and Santander.
Brazilian food company BRF (Baa3/BBB/BBB-) wrapped up European investors meetings today in Amsterdam and London through leads BNP Paribas, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Santander GBM.
A potential sale of a euro-denominated 144A/Reg S Green bond may follow.
Goldman Sachs is looking to bundle debt backing three of Colombia’s 4G highway projects and sell it as an up to US$500m 144A bond in the US markets as early as July.
Mario Alberto Huertas, the local construction company that won the highway concessions, has appointed Goldman Sachs as global co-ordinator and lead arranger for the financing efforts. It has also retained local bank Structure Banca de Inversion as financial adviser.
Mexico’s Comision Federal de Electricidad (CFE) has hired a string of banks to take it on the road to meet fixed-income investors. The state-owned power company has selected BBVA, Bank of America Merrill Lynch, Citigroup, Goldman Sachs, HSBC, Morgan Stanley and Scotiabank to organize the meetings.
The borrower, rated Baa1/BBB+/BBB+, will continue roadshows in Mexico City on Thursday and then head to Los Angeles on May 29, London on June 1, Boston on June 2 and New York on June 3. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)