NEW YORK, Feb 12 (IFR) - Latin American bond prices were well-supported Thursday morning as a ceasefire deal for Ukraine and rebounding oil prices heightened comfort with emerging markets and spurred some risk-taking.
But overall traders are reporting relatively light activity ahead of a long weekend in the US and the start of Carnival holidays in Brazil next week.
Primary market activity has also virtually ground to a halt as companies head into blackout periods.
This comes after the City of Buenos Aires raised US$500m through a six-year bond yesterday that priced at par to yield 8.95%, the tight end of 9.00% (+/-5bp) guidance and well inside initial talk of 9.25% area.
Those bonds were up about half a point this morning at 100.60-100.85. Order books peaked at around US$2bn.
Meanwhile a disappointing US retail sales print has US Treasuries bouncing back, in turn widening spreads among some Latin American sovereigns as prices remain flat.
This is particularly true for Brazil, whose 2025s were unchanged at around 97.40 despite a stronger tone surrounding beleaguered state-owned oil entity Petrobras, according to one trader.
Bondholders have largely cheered local news reports citing new CEO Aldemir Bendine saying that asset sales and cuts to Petrobras's massive investment plans are on the cards.
"He is beginning to say what people want to hear," said the trader. "The (world's) most indebted company needs to work on its debt management."
However, questions remain over the size of writedowns caused by alleged corruption at the company, with Bendine reportedly saying that asset impairments would be lower than expected.
Elsewhere in the Brazilian corporate space, Banco do Brasil's bonds remain well bid after yesterday's rally, with the 9% and 6.25% perps quoted at 81.00 and 67.00, respectively.
"They have been some of the best performers in price terms," the trader said about the state-owned bank's 6.25% bonds. "They are five points up from the low of around 62.00."
Among sovereigns, Venezuela is also looking stronger, partly thanks to higher oil prices. Both Brent and US crude futures were both up over US$1 this morning at US$55.79 and US$50.09, respectively.
But any price bounces are being seen as a selling opportunity, given the broader uncertainty about the sovereign's ability to pay its debt and disappointment about a new FX system expected to be launched today.
"All correlations between oil prices and bond prices tell us that VENZ-PDVSA bonds higher than the 40s are expensive," Jorge Piedrahita, CEO of broker Torino Capital, wrote to clients this morning.
"Either investors are very optimistic about oil, or bond positions should be reduced here."
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 on Wednesday. (Reporting by Paul Kilby; Editing by Marc Carnegie)