3 de junio de 2015 / 20:55 / en 2 años

LatAm sees profit-taking on supply, Treasury concerns

NEW YORK, June 3 (IFR) - Latin American bonds saw tighter spreads but weaker prices on Wednesday as investors took profits in anticipation of more supply ahead.

A back-up in US rates following the solid ADP jobs report also weighed on the region, though debt prices held up despite US Treasury yields hitting seven-month highs.

Meanwhile more LatAm borrowers moved ahead with bond trades.

Salvadoran bank Banco Agricola and Brazilian telco Oi joined a crowded pipeline following Petrobras’s blowout Century bond on Monday and Buenos Aires province’s new six-year yesterday.

“My biggest fear for a sell-off was more supply and now we are starting to see more supply,” said a New York-based trader.

“A bunch of companies are coming to market, so people are a little cautious.”

After a spike in trading on Tuesday, the new Petrobras 100-year saw its secondary volumes drop today. But spreads were closing some 5bp tighter at 520bp, or about 30bp inside pricing.

It was a similar story along the Brazilian state-controlled oil company’s curve, where the 2024s were being quoted at 405bp.

Meanwhile, the Province of Buenos Aires’s new six-year bond was off earlier highs at 99.50 but still above its 98.764 reoffer price.

The borrower is preparing to issue more such bonds on the back of an exchange offer for its 11.75% 2015s. The exchange will expire on June 8.

If settlement on the exchange occurs on June 11, holders are expected to receive about US$1,064 of new six-year bonds per US$1,000 of the 2015s.

Aside from the Province of Buenos Aires, LatAm Airlines was also expected to price a US$500m 2020 bond after releasing initial price thoughts of 7.25% area.

At that level, the Chilean airline is coming just inside lower-rated Colombian competitor Aviana (B+/BB-), which has 2020s trading between 7.5% to 7.9%.

The expected issue ratings are Ba3/BB-/BB-. That’s essentially a notch lower than the corporate ratings of Ba2/BB/BB-, mostly because of the large amount of secured debt at the top of the capital structure.


Lima Metro Line 2 Finance Limited, established by a consortium of Peruvian and European sponsors, has selected banks for a global roadshow ahead of a potential 144A/Reg S USD bond sale of US$1.14bn of senior secured notes.

The issuer met accounts in New York today and will head to Boston and London on June 4, and Los Angeles and London on June 5, leaving June 8 free for investor calls.

Citigroup, Morgan Stanley and Santander have been mandated as global coordinators for the bond, which is expected to be rated Baa1/BBB/BBB.

Mexico’s Comision Federal de Electricidad (CFE), rated Baa1/BBB+/BBB+, wraps up roadshows this week on an up to Ps10bn (US$645m) bond, including a Euroclearable local instrument targeted at foreign accounts.

CFE is expected to reopen its local 7.35% 2025s as soon as Thursday, but it will make them tradable through Euroclear to facilitate settlement and clearing for international accounts.

It has also filed to issue a five-year floater to be sold to local investors.

Leads are BBVA, Bank of America Merrill Lynch, Citigroup, Goldman Sachs, HSBC, Morgan Stanley and Scotiabank.

Salvadoran bank Banco Agricola, rated Ba2/BB+, has mandated Bank of America Merrill Lynch and Deutsche Bank to take it on the road to market a 144A/Reg S senior unsecured bond.

The borrower will be in Los Angeles and Bogota on Friday, and will head to London, Switzerland and Santiago on June 8, to New York and Miami on June 9 and to Boston and New York on June 10. Banco Agricola is 97.35% owned by Bancolombia, which is rated Baa2/BBB-/BBB.

Brazilian telecoms firm Oi is meeting bond investors from June 4, after which a euro 144a/Reg S bond may follow. The Ba1/BB+BB+ rated firm has mandated BB Securities, BofA Merrill Lynch, HSBC, Santander, Bradesco BBI, Citigroup, Deutsche Bank, BNP Paribas, BTG Pactual and Itau BB to arrange the meetings.

Brazilian aircraft manufacturer Embraer, rated Baa3/BBB, has mandated Citigroup and Morgan Stanley to meet fixed-income investors ahead of a potential SEC registered bond offering. The company finished marketing in New York on Tuesday. (Reporting by Paul Kilby; Editing by Marc Carnegie)

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