NEW YORK, March 19 (IFR) - Peru and Ecuador pulled the trigger on bond trades on Thursday to take advantage of a narrowing issuance window as oil and currencies remained under pressure.
“Everything is around the same level, but I am not sure it will hold with oil and currencies down again,” said Rodrigo Covian, a trader at Bulltick in Miami.
The Brazilian Real is back up at 3.28 against the dollar after dipping to 3.20 yesterday, while the Mexican peso was being quoted at 15.25, up from 15.08 yesterday. The Peruvian sol has also moved but less dramatically to hit 3.09 against the dollar.
Meanwhile, Brent was back below US$55 a barrel Thursday morning at US$54.52, while US crude had also slipped to US$42.90.
Brazilian oil company Petrobras was off earlier tights but largely holding on to yesterday’s gains.
The company’s short-dated paper maturing between 2016s and 2020 is offering yields between the high 7s and low 8s. On a spread basis the 2016s, 2024s and 2044s were trading at around the low 700s, 583bp and 575bp.
Ecuador meanwhile is targeting a shorter-than-expected five-year bond at a yield of 10.5% while Peru is carrying out a tap of its 5.625% 2050 dollar bond and sol-denominated 6.95% 2031 in combination with a tender-and-switch offer for dollar and local currency debt maturing between 2015 and 2025.
Leads BBVA, Deutsche Bank and Morgan Stanley are out with initial price thoughts of Treasuries plus 237.5bp area on the dollar tap and 7% area on the reopening of the sol denominated bond.
As with the sovereign’s liability management trade late last year, investors have the choice of tendering their bonds for cash, switching their existing bonds for the new issue or buying the new securities for cash.
“When Peru announced we saw buyers on the curve,” said Covian. “Sentiment is more optimistic than yesterday and with (the 10-year) US Treasury below 2%, that will be supportive, but with oil down and currencies a bit depressed, it will be difficult to sustain the rally.”
Colombia Telecomunicaciones (ColTel), Colombia’s second-largest telecommunications company, has hired BBVA and HSBC as structuring advisors as well as joint bookrunners along with Citigroup and Credit Suisse to arrange a series of investor meetings in the US, Europe and Asia.
A US dollar-denominated 144A/Reg S hybrid bond transaction may follow. The issuer is rated BB/BB, while the hybrid bond is expected to be rated B+/B. ColTel is 70% owned by Spain’s Telefonica S.A. and 30% owned by the Republic of Colombia. Meetings kicked off this week and will continue until March 24.
Peruvian state-controlled mortgage bank Fondo Mivivienda, rated BBB+ by both S&P and Fitch, wrapped up investor meetings this week through leads Deutsche Bank and JP Morgan.
Mexican media company TV Azteca is expected to bring to market a rare project bond related to the development of the Andean country’s fiber optic network. (Reporting By Paul Kilby; editing by Shankar Ramakrishnan)