Investors eye Greece, Ukraine, Fed; America Movil, ADCB on roadshows; Costa Rica deal ahead

By Christine Van Dusen

Atlanta, Feb. 19 – Latin American corporate bonds saw consistent buyers and steady improvement on Thursday as emerging markets investors closely watched Greece and Ukraine and digested the news that the Federal Reserve may raise interest rates later than expected.

On Thursday, Germany rejected Greece’s request for a six-month extension of its loan program – a surprising move, given that the European Commission had called the request a “positive sign.”

Meanwhile, Ukraine withdrew its troops from Debaltseve while rebels pulled heavy weapons from quiet areas, raising the possibility of a successful ceasefire.

“Still reports of fighting, however, including this morning,” a London-based analyst said. “Kiev said the rebels had violated the ceasefire 24 times as of 6 p.m. yesterday.”

Credit default swaps spreads from Russia widened 5 basis points on Thursday morning after tightening as much as 20 bps on Wednesday, he said.

“Reports of fighting overnight, and lower oil prices, mean we open weaker in Russia this morning,” he said.

From Turkey, credit default swaps spreads opened 1 bp tighter, while sovereign cash bonds were 5 bps wider on the move in rates, he said.

Many bonds from Central and emerging Europe were 3 bps wider on Thursday morning, he said.

Notes from the Middle East put in a busy session on Thursday, a London-based trader said, with most spreads retaining gains after the Federal Open Market Committee notes were released.

“On the long end, it feels like there’s some paper around,” he said. “There’s been two-way on DP World and Saudi Electricity Co. today, the latter holding on to 35 bps to 38 bps gains over the month.”

Bahrain, perpetuals perform

Bahrain was “impressive” on Thursday, with the 2044s closing at 98¼ bid, 98¾ offered, 40 bps tighter on the week, the trader said.

“Dar al-Arkan Holdings goes to the top of the class,” he said. “The 2016s are closing a cool 80 bps tighter over the week, trading now near 101, with a slew of buyers in the wings.”

The 2026 euro-denominated bond from Abu Dhabi-based Etisalat continued a “superb run,” he said.

And “perpetuals trade very well,” he said. “Massive squeeze on both Dubai Islamic Bank bonds.”

High-grade names move higher

High-grade names stood out among Latin American corporates on Thursday, a New York-based trader said.

Bonds from Brazil-based Petroleo Brasileiro SA seemed to be taking a breather from trading, with the curve moving a little wider on thinner volumes, he said.

Chile-based Cencosud SA’s two-tranche issue of $1 billion notes due Feb. 12, 2025 and 2045 led Chilean high-grade names higher, he said.

And high-grade names from Mexico also moved higher, though Cemex SAB de CV’s notes saw muted volumes, he said.

Venezuela, PDVSA weaken

Among Latin American sovereigns, bonds from Venezuela and PDVSA were weaker on Thursday, with the 2027s trading down at 41¼ and PDVSA 2017s at 65, another New York trader said.

Liquidity and buyers were both scarce during the session, he said.

Latin American bonds are expected to continue to improve as a result of the Fed’s statement about future interest rates, according to a report from Schildershoven Finance BV.

“The market was also positively affected by the statement of Brazil’s attorney general, who said the government will offer companies involved in the corruption scandal a leniency agreement,” the report said.

GeoPark finds new field

In other news from Latin America, Argentina’s GeoPark Holdings found a new oil field in Colombia, which “pleased investors,” Schildershoven said in its report.

“It is positive news, as the company currently has a medium reserve base,” the report said. “Only investors with high risk tolerance should invest in company’s bonds, as oil price volatility continues to be high in the nearest term.”

America Movil to market deal

Mexico’s America Movil SAB de CV will depart Friday for a roadshow to market a peso-denominated issue of notes, a market source said.

BBVA, Citigroup, Credit Suisse, Deutsche Bank, HSBC and Morgan Stanley are the bookrunners for the deal.

The roadshow will begin in Mexico and travel to Zurich, Frankfurt, London, Boston and New York before concluding on Feb. 27 in Los Angeles.

America Movil is a Mexico City-based telecommunications company.

Costa Rica mandates bookrunners

Costa Rica has mandated Deutsche Bank and HSBC as the bookrunners for up to $1 billion of 30-year notes that are expected to be issued by the end of this year, a market source said.

Other details were not immediately available on Thursday.

Abu Dhabi bank sets roadshow

Abu Dhabi Commercial Bank PJSC will set out on Feb. 23 for a roadshow to market a dollar-denominated and benchmark-sized issue of notes, a market source said.

Barclays, ING, JPMorgan, Mizuho Securities and Wells Fargo are the joint mead managers for the Regulation S deal.

The roadshow will be held in Europe.

“ADCB has joined the supply party today. I say party, but it’s more like a small gathering at the moment, with Dubai Islamic Bank, National Bank of Abu Dhabi and First Gulf Bank the only names to have tapped the market this year,” a trader said.

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