Morning Commentary: Colombia’s new notes trade up, spreads tighten; Venezuela active

By Rebecca Melvin

New York, Jan. 24 – The Republic of Colombia’s newly priced $2 billion of new 30-year notes and tap of its 4½% global bonds due 2029 were trading higher on Thursday with the bonds heard about 0.75 point higher and about 5 basis points tighter on spread, according to a New York-based trading source.

Colombia priced $1.5 billion of the new 5.2% notes due 2049 at 99.705 to yield 5.22%, or a yield spread of Treasuries plus 215 bps.

The $500 million tap of the 2029 notes priced at 100.429 to yield 4.446%, or Treasuries plus 170 bps.

A shift in sentiment for emerging market debt means that these bonds saw strong demand during the pricing phase.

A second deal from Colombia’s Termocandelaria Power Ltd. that was on the calendar also priced. Details of that deal were not immediately available.

In the secondary market, Venezuela’s bonds were more or less flat on Thursday after a surge on Wednesday after the country’s opposition leader Juan Guaido declared himself interim president as Venezuelans rallied in street protests against the leadership of current socialist president Nicolas Maduro.

The Venezuela sovereign curve started weaker and then rebounded in early trading, a New York-based trading source said.

The volume of bonds changing hands is higher, the source said, with “decent flow, but they’re not ramping up like some people thought they would.”

Uncertainty may be holding the bonds back. Venezuela’s benchmark 2027 bonds rose to 31.5 on Wednesday, which was up 2 or more points on the day and near its highest level in seven months.

“It’s not a done deal yet,” the market source said regarding the ouster of Maduro, who has been at the helm of a regime that over the course of the last several years leaves Venezuela’s social and economic fabric in tatters.

Also in the primary market, the Republic of Turkey launched a new €1.25 billion issue of notes due 2025 to yield 4¾%. Pricing of the notes was on the tight end of guidance for a yield of 4.8%, plus or minus 5 bps, and below initial price talk for a 5% area yield.

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