May 5, 2015 / 8:50 PM / 3 years ago

LatAm credits shrug off weak equities

NEW YORK, May 5 (IFR) - Latin American credits showed strong resilience to weakness in equities on Tuesday, as several names across the region ended the session on a solid footing.

“Even in the face of negative equities the market is doing better,” said one corporate bond trader in New York. “Accounts are being forced to put money to work.”

Investment-grade bonds saw healthy two-way flows during the day, while high-yield names were generally better bid, according to a second New York trader.

Brazilian names such as state-run oil company Petrobras and miner Vale were both ending the day tighter in spread, with the former’s 2024s last quoted at 420bp-423bp, or 7bp tighter, and the latter’s 2022s spotted at 260bp-255bp, or 3bp tighter.

A number of high-yield credits were also better bid, with 2019s issued by Colombia-focused oil exploration and production company Pacific Rubiales up a point at 79.75-80.50 and telecom Digicel’s 2023s up half a point to 98.75-99.25.

Among sovereigns, Argentina’s Bonar 2024s dropped half a point to 99.5-100.5.

Participants put that down in part to buyers of the recent tap seeking to cash in, as well as concerns that the notes might eventually be caught up in the legal tussle over Argentine debt.

Notes issued by YPF meanwhile were in strong demand, suggesting that some investors might have rotated out of the Bonar 2024s and into the state-run oil company.

The company’s 2024s were ending half a point lower in price at 105.25-105.75, while the new 2025s were up as much as three quarters of a point to a record 102.5-103.0.

In primary markets, Mexican tequila maker Jose Cuervo set initial price thoughts of 200bp over US Treasuries for its debut, a US$500m 10-yearexpected to launch and price Wednesday.

At that level, the bond is seen coming at a healthy premium to other Mexican credits such as Grupo Bimbo and Femsa.

“We like it,” said the second corporate bond trader. “It looks cheap to peers.” (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)

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