Trading quiet ahead of Brexit vote; Lat-Am spreads narrow a touch; Arcor plans issuance

By Christine Van Dusen

Atlanta, June 22 – Latin American bonds tightened slightly on a quiet Wednesday after Federal Reserve Chair Janet Yellen’s comments – advocating a cautious approach to rising rates – and ahead of Thursday’s vote on whether or not the United Kingdom will stay in the European Union.

Also impacting the big picture was Tuesday’s news that the European Union is likely to extend sanctions on Russia for six more months.

“Despite the uncertain outcome in tomorrow’s referendum, general market sentiment remains resilient,” a London-based strategist said.

But trading was “a little subdued,” a London-based trader said. “The bottom line: Life will go on and – just like tech stocks, Chinese stocks, oil prices – it will disappear into the background in a few weeks.”

Latin American credit managed to finish the day slightly tighter and higher but well off the best levels of the session, a New York-based trader said.

“Equity and oil reversal had spreads and cash prices moving back towards yesterday’s close,” he said.

Five-year credit default swaps spreads for Brazil closed at 327 basis points from 328 bps after trading as tight as 324 bps earlier in the day, he said, and Mexico’s CDS closed at 163 bps from 166 bps.

“Cash prices finish mixed, with Brazil and Mexico outperforming peers,” he said. “Latin American high yield finishes firmer on the day, with Venezuela and Argentina higher.”

In deal-related news, Argentina-based candy-maker Arcor SAIC announced plans to issue notes alongside a tender offer.

The company is offering to pay $1,018.13 per $1,000 principal amount of notes plus accrued interest up to but excluding the settlement date, according to a news release.

The tender will end at 5 p.m. ET on July 1. Settlement is expected three business days later.

Lat-Am ticks up

Venezuela’s 2027s closed at 46 from 44.75, PDVSA’s 2017s at 69.50 from 69, and Argentina’s Bonar 2024s at 113.875 from 113.25. Argentina’s 2026s closed at 107.80 from 107.25, the New York trader said.

“Volumes picked up today, with two-way flows as position-squaring continues to be the theme,” he said. “The eagerly awaited referendum is finally afoot, with market nervousness very subdued, considering all the hype surrounding the consequences of various outcomes. Tomorrow should be a very light session until clarity on the results starts to hit the wire.”

Ooredoo dips below par

The new issue of notes from Qatar’s Oordeoo QSC – 3¾% notes due 2026 that priced at 98.964 to yield mid-swaps plus 240 bps – moved below par on Wednesday, a trader said.

The notes were talked at a spread of 240 bps to 245 bps.

HSBC was the global coordinator, and ANZ, BofA Merrill Lynch, Citigroup, DBS Bank, HSBC, Mizuho Securities, MUFG Securities and QNB Capital were the joint lead managers and joint bookrunners for the Rule 144A and Regulation S deal.

Perpetuals get nibbles

Some perpetual notes from the Middle East experienced a “little nibbling,” the trader said. “Some two-way on Oman 2021 and 2026, and Saudi Electricity Co. retains a very solid bid across their curve.”

DP World’s 2023s traded well, he said, seen near par.

Also from the Middle East, Lebanon’s bonds were wider on Wednesday, another trader said.

Recent central bank actions are “soaking up all the dollar liquidity from local banks,” he said. “As such we’ve witnessed a good 40 bps to 60 bps widening over the month, with very poor liquidity.”

© 2015 Prospect News.
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