Banco Santander Chile, AlphaCredit price; Venezuela CDS auction settles; market mostly quiet ahead of central bank meetings

By Rebecca Melvin

New York, Dec. 12 – A pair of deals for the Latin America region priced on Tuesday, representing some of last new issues of 2017 as the primary window was essentially closing for the holiday season and yearend, market sources said.

The deals were meant to get squeezed in ahead of Wednesday’s news from the U.S. Federal Reserve on a potential rate hike and setting its policy course for 2018.

Banco Santander Chile SA priced an offering of $500 million of 2½% three-year notes to yield 2.669% and Mexico’s Alpha Holding SA de CV priced $300 million of 10% five-year notes at par.

Santander Chile priced at 99.516 for a yield spread of 72 basis points over U.S. Treasuries.

Dutch-speaking Suriname of South America announced that it plans to conduct a series of investor meetings to plot a debt private placement transaction for 18 months for up to $75 million.

The government of the small country said proceeds are intended to be used for general budgetary purposes, with specific emphasis on road construction and hospital payments; and that potential sources for repayment include the sale of certain state-owned assets and proceeds of repayments of liabilities owed to the government.

Meanwhile, an auction of credit default swap contracts for two Venezuela bonds settled at the final price of 24.5, according to the International Swaps and Derivatives Association.

As announced Nov. 22, Venezuela had defaulted on $2,495,963,700 of 7¾% notes due 2019 and $2,495,963,000 of 8¼% notes due 2024. Interest payments were originally due on Oct. 13.

There are also Petroleos de Venezuela SA CDS contracts that will go to auction.

Otherwise, emerging market credit was fairly quiet with focus on three important monetary policy meetings slated this week and as many trading and syndicate desks begin to close out their books for the year ahead of the holiday season.

“With the holiday season quickly approaching, we have seen market activity becoming more muted despite a busy week in terms of news flow and events,” MUFG Securities EM strategist Trieu Pham wrote in published commentary.

Oman was an exception to the seasonal lull after Fitch Ratings downgraded the Middle Eastern credit to BBB- from BBB, citing a worsening budget but spending expected to remain high even as the price of oil has recovered recently.

For markets, it’s an important week in terms of rate decisions among the major developed market central banks. Following the Fed’s Wednesday decision the Bank of England and European Central Bank will both make decisions on Thursday.

The Fed is widely expected to raise rates while the BoE and ECB are expected to maintain their monetary policy stances unchanged.

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