June 26, 2015 / 6:49 PM / 2 years ago

LatAm credit spreads inch tighter as investors focus on Greece

NEW YORK, June 26 (IFR) - Latin American credit were mostly tighter on light volumes on Friday with prices holding their own against weaker US Treasuries.

The yield on the 10-year US Treasury jumped to 2.47% following a retreat from safe haven assets on news that Eurozone creditors had offered to release aid in effort to cut a deal with Greece.

A successful resolution to Greek debt talks over the weekend could push US rates higher, putting further pressure on LatAm credits, said a New York-based trader.

This includes debt prices in Brazil, which have recently retreated amid speculation that Petrobras’s corruption scandal could impact powerful political figures, including former President Luiz Inacio Lula da Silva.

“There is a lot of money being lost in Brazil, with guys trying to call the bottom,” said a New York based trader. “What I care about is performance and price action and price action has been weak in Brazil.”

Brazilian construction firm Odebrecht’s 2029s continued to slip following the arrest last week of its CEO in connection with the investigation into kick-backs at Petrobras.

Those bonds were being quoted about half a point lower, but at wide bid offer of 75.50-77.00, though the company’s 6.75% 2022s, backed by drillships on charter to Petrobras, were about 1/4 point stronger at 71.375-72.375.

Elsewhere, the recently minted seven-year bond from Mexican hotel chain Posadas was putting in a strong performance jumping to as high as 101.75-102.00 after pricing yesterday at par to yield 7.875%.

Meanwhile, bonds issued by Pacific Rubiales were drifting lower on Friday as Mexico’s Alfa stood firm in its bid for the oil and gas company amid a heated proxy battle over the acquisition.

The latest shot across the bows in Venezuelan investment firm O‘Hara Administration Co’s efforts to block the sale came last night when conglomerate Alfa said its offer of C$6.50 per share was “fair and final”.

The 2023s and 2025s were about a quarter point lower this morning at 76.00-77 and 76.60-77.50, respectively. Meanwhile, the shorter-dated 2019s were at 86.50-88.00, down from 87.25-88.00 Thursday.

This comes as EM debt funds suffered their fifth straight week of outflows, albeit at a relatively modest pace. Some US$343.83m exiting the asset class during the week ending June 24, according to UniCredit citing EPFR data.

PIPELINE

Peruvian development bank Corporacion Financiera de Desarrollo SA (COFIDE) has mandated Citigroup, Morgan Stanley and Standard Chartered to roadshow a possible US dollar 144A/RegS bond sale.

The borrower, rated BBB+/BBB+, was in Boston today and will head to London on June 29 and wrapping up in New York on June 30.

Banco Santander Chile has mandated Deutsche Bank and Santander to arrange global fixed-income investor meetings to discuss opportunities in the domestic Chilean markets.

The bank, rated Aa3/A/A+, will be in London on July 6, in Boston on July 7, in New York and nearby on July 8 and 9, finishing up in Los Angeles on July 10.

Jamaica, rated Caa2/B/B-, has wrapped up roadshows via Citigroup. The meetings were described as a non-deal roadshow, but markets have been expecting the sovereign to raise funding to retire a PetroCaribe loan owed to Venezuela. (Reporting By Paul Kilby; Edited by Shankar Ramakrishnan)

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