NEW YORK, March 16 (IFR) - Corporate credits underperformed sovereigns on Monday in a relatively quiet session that saw Brazilian corporates and Colombia-focused E&P company Pacific Rubiales remain under pressure.
“Corporate bonds are under pressure again,” said one trader in New York. “The market is a bit of a mixed bag with equities in the G7 doing very well and some stabilization in emerging market currencies today. It just seems like there isn’t much of a bid for Brazilian corporates.”
While Brazil’s sovereign bonds and credit default swaps were ending the day little changed, short-dated notes issued by state-run oil company Petrobras dropped by as much as two points.
The move reinforced a trend that has seen the company’s curve become increasingly inverted in recent days, with the 2% 2016s spotted today at a cash price of around 93 to yield 8.4% and the 2021s seen trading at 88 to yield around 8%. That compares with a yield of 7.78% on the company’s 2024.
“Even in yield terms the curve is slightly inverted,” said the trader.
Elsewhere in the region, bonds of Colombia-focused oil company Pacific Rubiales recovered only slightly from their sharp morning drop, following the announcement that it will not extend a joint venture and risk participation agreements with state-owned Ecopetrol.
The company’s 2025s were last quoted at 55.5 at the close, up 1.5 points from their intra-day low but still sharply lower compared to their 61.50-63.00 closing level on Friday.
Among sovereigns, cash bonds were underperforming credit default swaps, with the former seen widening by some 2bp to 5bp, while the latter were closing some 2bp tighter on average.
Venezuela’s Finance Minister Rodolfo Marco Torres, meanwhile, announced on Twitter today that the country has fully repaid a EUR1bn bond coming due on Monday, including EUR70m of interest due on the note.
“With the Venezuela 2015 paid, there was strong demand for the (new) PDVSA 2017 and some demand for the PDVSA 2015,” wrote Jorge Piedrahita, CEO at broker Torino Capital.
The Republic of Peru (A3/BBB+/BBB+) has hired BBVA, Deutsche Bank and Morgan Stanley to arrange meetings with fixed-income investors. It will be in Los Angeles and London on Tuesday and wrap up in Boston on Wednesday.
Ecuador is expected to come to market a new US dollar-denominated bond sale as soon as this week through lead Citigroup.
Peruvian state-controlled mortgage bank Fondo Mivivienda, rated BBB+ by both S&P and Fitch, also wrapped up investor meetings today in Germany through leads Deutsche Bank and JP Morgan.
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)