(CORRECTS to add BBVA, HSBC as joint bookrunners for ColTel)
By Paul Kilby
NEW YORK, March 16 (IFR) - With crude prices hitting recent lows and the Petrobras scandal overshadowing a whole swath of Brazilian credits, LatAm bond markets were largely starting on a back foot Monday morning.
Brazilian bonds were under pressure as unease over the investigation at Petrobras continued to weigh on sentiment and to spill over into the political arena at a time when the government is trying to push through key fiscal measures.
Protest on Sunday brought close to a million Brazilians out in the streets in the latest expression of frustration over the country’s flagging economy and the extent of the scandal.
Virtually every bond in the Brazilian corporate space has been touched by the affair, providing accounts with little comfort about investing in the country overall.
“The number of companies directly or indirectly involved in the corruption scandal is almost the whole market,” said a New York-based trader. “When you look at all the companies involved you have like 30 (outstanding bond) issues.”
Meanwhile the Real was off recent highs but still trading at 3.22 against the dollar this morning, while spreads on Petrobras bonds started the day about 10bp wider.
The oil entity’s 2024s and 2044s were opening at 570bp-560bp and 550bp-540bp, respectively.
This comes as crude prices sink further. Brent fell to its lowest level in over a month at US$54 a barrel, while US crude hit US$43.57, its lowest since March 2009, according to Reuters.
Weakness in crude prices is also applying pressure to oil names in other parts of Latin America, where Colombia-focused E&P name Pacific Rubiales has tumbled several points after the company and state-owned oil name Ecopetrol said they would not extend the Rubiales field risk participation and Pririri joint venture contracts that expire next year.
Ecopetrol said in a statement it would be “examining different options for the operation of the Rubiales field”.
“For its part, Pacific Rubiales Energy will explore the possibility of presenting a proposal to operate this asset,” the statement said.
Pacific Rubiales 2025s were being bid 54.00 Monday morning after closing Friday at 61.50-63.00.
ColTel, Colombia’s second-largest telco, has joined a pipeline largely dominated by sovereigns. It will visit investors in the US, Europe and Asia as it looks to market a rare hybrid structure expected to be rated B+/B.
The company, rated BB/BB, has hired BBVA and HSBC as structuring advisors and joint bookrunners and Citigroup and Credit Suisse as joint bookrunners.
ColTel is 70% owned by Spain’s Telefonica SA and 30% owned by the Republic of Colombia. Meetings will kick off on March 17 in Bogota and continue until March 24.
The Republic of Peru (A3/BBB+/BBB+) has hired BBVA, Deutsche Bank and Morgan Stanley to arrange meetings with fixed-income investors in New York today, in Los Angeles and London on March 17, and Boston on March 18.
Ecuador wrap up roadshows this week through Citigroup amid expectations that it could soon return to the international capital markets with a new US dollar bond sale.
Peruvian state-controlled mortgage bank Fondo Mivivienda, rated BBB+ by both S&P and Fitch, is also finishing investor meeting today in Frankfurt through leads Deutsche Bank and JP Morgan.
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. (Reporting by Paul Kilby; Editing by Marc Carnegie)