Odebrecht executive’s arrest hurts bonds; Pacific Rubiales eyed; Lifestyle sets talk

By Christine Van Dusen

Atlanta, June 18 – While many emerging markets bonds took a break on Friday from the week’s rampant volatility, corporate notes from Brazil took a beating on the news that the chief executive officer of Odebrecht SA had been arrested in connection with the corruption scandal that ensnared Petroleos Brasileiro SA.

Odebrecht’s notes dropped 10 points in the morning and then recovered some of those losses later in the day, while credit default swaps spreads for the sovereign widened to 240 basis points from 233 bps.

The chief executive of construction company Andrade Gutierrez SA also was arrested, which hurt the company’s 2018 bond, a trader said.

High-yield names from Latin America were mixed, with Argentina moving lower and Venezuela and PDVSA mostly unchanged to slightly higher, he said.

Latin America-focused Pacific Rubiales Corp. remained in the news on Friday after the company accused dissident shareholders the O’Hara Group of not waiting the required period of time before purchasing a block of shares.

Pacific Rubiales wants a court to exclude these shares from the July 7 vote on a planned takeover by Mexico’s Alfa SAB de CV and Harbour Energy Ltd., a deal that O’Hara opposes.

Meanwhile, China’s Lifestyle International Holdings Ltd. set initial talk at Treasuries plus 245 bps for a dollar-denominated offering of 10-year notes, a market source said.

© 2015 Prospect News.
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