NEW YORK, Feb 12 (IFR) - Brazil led Latin American credits higher on Thursday, as bond investors welcomed plans by state-run oil firm Petrobras to cut capital expenditure and sell assets.
“Petrobras was the story of the day,” said one trader in New York. “That was leading things tighter from the get-go in Brazil.”
Spreads on the company’s curve compressed by 20bp-30bp today, lifting sentiment across Brazilian corporate and sovereign curves.
A 2042 note issued by construction company Odebrecht, which along with other contractors is under investigation for alleged kickbacks from Petrobras, extended gains to end three points stronger at 70.
After opening slightly weaker, Brazil’s sovereign curve was also ending tighter, outperforming other sovereigns in the region.
The country’s credit default swaps tightened by 10bp to 242bp by the end of the session, while those of Mexico, Colombia and Peru compressed by a more modest 5bp.
Venezuelan bonds also closed about two points higher, lifted by a 4.4% rally in oil prices as well as optimism over the roll-out of a new foreign-exchange platform, which is expected to be completed over the coming days.
The sovereign’s 2022s ended the session at a bid price of 45.75, while state-owned oil company PDVSA’s 2021s were bid at 39.25. Volumes, however, remained low.
“We didn’t see a lot of demand today,” said a broker in New York. “Until we can gauge what the implications (of the new system) are going to be and how the mechanism is going to work, I don’t think anybody will be too eager to get involved.”
Grupo Senda Autotransporte, a Mexican bus transportation company, has finished roadshows ahead of a possible USD 144A/Reg S bond offering. Expected ratings are B/B (S&P/Fitch). CS and JP Morgan are active bookrunners, and BBVA passive.
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. Pricing is expected toward end of February.
Costa Rica has chosen Deutsche Bank and HSBC as lead managers on an up to US$1bn international bond sale that could take place as early as this month, market sources told IFR. (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)