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Published on 5/18/2016 in the Prospect News High Yield Daily and Prospect News Investment Grade Daily.

Primary hosts Hipotecario, Pemex, Ceske Drahy; FOMC notes send Lat-Am wider; Kallpa on deck

By Christine Van Dusen

Atlanta, May 18 – Argentina’s Banco Hipotecario SA, Mexico’s Petroleos Mexicanos (Pemex) and Czech Republic’s Ceske Drahy AS sold notes on a challenging Wednesday for emerging markets assets, which saw spreads widen as the Federal Open Market Committee released minutes that indicated a rate hike could come as soon as June.

Latin American bonds dropped on Wednesday in response, a New York-based trader said.

Brazil’s five-year credit default swaps spreads finished the day at 346 bps from 333 bps, while Mexico’s moved to 176 bps from 170 bps.

“Cash prices get hammered as the U.S. Treasury selloff and spread widening proves too much,” he said. “Lat-Am high yield finishes mixed on the session.”

Venezuela’s 2027s were down at 42.50 from 43, PDVSA’s 2017s finished at 64 from 63, and Argentina’s Bonar 2024s closed at 109.625 from 110.

The sovereign’s 2026s, meanwhile, closed at 103.30 from 104.30.

In deal-related news, Middle Eastern issuers are expected to continue bringing new deals.

Peru’s Kallpa Generacion SA set talk in the Treasuries plus low-to-mid-300 bps area for a $350 million issue of 10-year notes (expected ratings: Baa3//BBB-), a market source said.

Turkey is planning to hold a roadshow during the first half of this year for an issue of Islamic bonds, a market source said.

Qatar will hold an investor call on Friday for its upcoming issue of dollar-denominated and benchmark-sized notes, a market source said.


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