NEW YORK, March 12 (IFR) - Latin American credits were lagging a rally in US Treasuries at the open on Thursday, with bonds in the region starting higher in price but wider in spread terms as several currencies in the region pulled back from recent lows.
Disappointing retail sales data in the US has helped Treasuries grind tighter for the fourth session in a row, with the yield on the 10-year note back to around 2.05% in early trading, or 5bp tighter on the day.
Retail sales unexpectedly fell by 0.6% in February, their third consecutive monthly decline, casting a shadow on economists’ first-quarter GDP growth estimates.
The move in rates, however, helped push bond prices higher on Latin American high-grade names, with the belly of most credit curves up 25 cents and the long-dated bonds up as much as 75 cents.
“The market is stronger,” said a Latin America corporate bond trader in New York. “We have a bid for rates and credit derivatives are tighter.”
Brazil’s 2024 notes, for example, started the session half a point higher in price at 96.5-97.5, while the country’s five-year credit default swaps were some 10bp tighter at 275bp-279bp, according to the trader.
Elsewhere in the region, a 1.5% rise in Brent crude prices pushed Venezuelan bonds marginally higher in early trading, especially at the long end.
Venezuela’s 2038 notes were 25 cents higher at 34.50-35.50, while the 2022s were unchanged at 45.75-46.75, according to a New York-based broker.
Panama’s newly issued 3.75% 2025 rose by almost a full point on the break to trade at 99.50-99.80, according to a sovereign bond trader in New York.
Ecuador could return to the international capital markets with a new US dollar bond sale as soon as next week, as it seeks to plug a widening budget gap in the wake of falling oil prices.
Investor meetings are taking place in San Francisco today and will move to New York on Friday. The country is looking to raise at least US$1bn, according to a source familiar with the transaction.
Peruvian state-controlled mortgage bank Fondo Mivivienda, rated BBB+ from both S&P and Fitch, has mandated Deutsche Bank and JP Morgan to organize a series of fixed-income investor meetings. The borrower is in Amsterdam today and will be in Paris on Friday. The following week, it will meet investors in Frankfurt on March 16.
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 Davide Scigliuzzo; Editing by Paul Kilby