March 10, 2015 / 9:15 PM / in 3 years

LatAm corporate credits slide on currency weakness

NEW YORK, March 10 (IFR) - Latin American credits extended losses on Tuesday as traders struggled to find buyers in the midst of a currency rout and a 3% slide in oil prices.

“If I look at my screen I see offers on every corporate bond,” said a broker in Miami. “It is still extremely difficult to find bids.”

Weakness in a number of emerging market currencies, with the Mexican peso hitting an all-time low of 15.65 to the dollar, was the main driver of the sell-off in credit, said the broker.

Corporate bonds were bearing most of the brunt, ending the day some 25 to 75 cents lower in price, with oil-related names such as Colombia-focused Pacific Rubiales underperforming.

“With (WTI) oil (prices) back below US$50 (a barrel), we saw better selling in the afternoon,” said a New York-based trader.

Pacific Rubiales 2025s, for example, were last spotted at a bid price of 66.5, or two points lower on the day.

Among the few credits bucking the trend was Mexican infrastructure company Empresas ICA, which saw its 8.875% 2024s rise 50 cents to a cash price of 76.

“I think the (ICA) bonds looked relatively cheap and over the last week or so more people started paying attention,” said the trader.

In spite of their currencies touching multi-year lows, sovereign bonds appeared to hold up relatively well, with Brazil 2025s ending the day 75 cents higher at a mid-market price of around 95.

Brazil’s five-year credit default swaps were ending the day just 2bp wider at a spread of 281bp, while Mexico’s were unchanged at 132bp, according to the broker.

On the new issue front, supply was limited to a US$500m 10-year non-call five issue from telco Millicom International Cellular.

The company, which has operations in Africa and Latin America priced the transaction at par to yield 6%, tight to initial price thoughts of 6.25% area.

BNP Paribas, Citigroup, Goldman Sachs and JP Morgan were the lead managers on the deal.


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 financing gap in the wake of falling oil prices.

Investor meetings, which took place in London on Monday and Boston on Tuesday, will move to Los Angeles on Wednesday, San Francisco on Thursday and New York on Friday.

The country is looking to raise 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 in Europe starting in London on Wednesday.

The borrower will move on to Amsterdam on Thursday and 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.

Panama has filed with the SEC to sell up to US$3.04bn in debt, raising expectations that the sovereign could soon come to the international bond market. (Reporting by Davide Scigliuzzo; Editing by Shankar Ramakrishnan)

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