Latin American credit tightens modestly; Turkey still weighs on market, but buyers appear

By Paul A. Harris

Portland, Ore., July 20 – Flows were light during the Wednesday New York session, but two-way markets were seen, a source said.

Latin American credit tightened modestly, with Brazil five-year credit default swaps closing at 286 basis points bid, three points tighter on the day, and Mexico five-year CDS closing at 139 bps, two points tighter.

The emerging markets index dropped a nickel, finishing at 93.05 bid, down from 93.10 bid.

Latin America high yield weakened on the session.

Venezuela’s state-owned PDVSA’s notes due in 2017 finished unchanged at 78 bid.

Venezuela sovereign bonds due 2027 closed at 50.35 bid, down from at 51 bid.

Turkey continued to exert a drag on the market.

However, during the Wednesday London session buyers of Turkish credit finally made an appearance, a source said, but added that the market is still skewed toward sellers, with people testing bids but declining to execute.

There is price discovery going on amid volatility being generated by a continuing stream of news headlines on the activities of the Erdogan government, a source said.

In deal-related news, Kazakhstan’s Tengizchevroil (TCO) issued final spread talk on its $1 billion offering of 10-year amortizing senior secured notes (Baa2/BBB) at Treasuries plus 275 bps to 287.5 bps, according to a portfolio manager who added that the deal should go well.

Chile-based Empresa Nacional del Petroleo (ENAP) announced in a Wednesday press release that it proposes to offer new notes in order to help fund a $600 million tender offer.

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