By Paul Kilby
NEW YORK, Oct 1 (IFR) - LatAm sovereign and corporate debtended better bid Tuesday after holding up against weaker USTreasuries and tightening some 3-7bp tighter despiteexpectations to the contrary.
Higher prices were partly due to some short-covering afterthe expected sell-off on today's partial US government shutdownfailed to materialize, said a New York-based trader.
Markets may also get some temporary relief from taperingfears - or at least that is the assumption among some traderswho reason that the shutdown will stop key employment data frombeing released on Friday.
Among sovereigns, Brazil 2023s were closing about 10cthigher at 87.85-88.10, while Mexico followed a similar pathhigher to hit 99.80 mid-market. Five-year protection rallied atouch, with Brazil tightening about 3bp to 170bp-175bp andMexico 2bp to 118bp-122bp.
In the high-beta space, Boden 2015s dropped several pointsto 92.50-93.00 - mostly because it is now trading ex-couponafter a recent interest payment. Meanwhile, Venezuela 2022scontinue to drift lower to end the day at 99.45-99.95.
On the corporate side, Caixa Economica Federal's 4.50% 2018sfinally caught a bid to close at 99.50-99.60, putting them abovea reoffer of 99.330. BNDES's new 2022s were also up 1/4pt to endat 100.50-100.80.
Meanwhile, market uncertainty stemming from the debt debatein the US is starting to claim its first victims as investorpushback forces sub-investment grade credits to adjust pricingterms or postpone deals altogether.
Mexican consumer finance company Credito Real threw in thetowel today on its US$300m five-year non-call three, citingmarket conditions for postponing the transaction.
Mexican Marine oil services company Oceanografia returned toprint a US$160m five-year bond at par to yield 12%, but onlyafter readjusting pricing terms and cutting the size in half.
Just last week the borrower postponed the transaction afterfailing to garner sufficient demand despite downsizing itto USD280m from USD300m and offering a higher 12% coupon.
The amortizing structure was also changed to take place inquarterly installments of USD8.5m beginning in 12 months afterthe settlement date. Previously it involved USD8.4m paymentsstarting 24 months after the settlement date.
The bond was originally secured by a first lien mortgage ontwo subsea vessels - OSA Goliath and Caballo Marango - the samenames given to the two joint issuers, which are wholly ownedsubsidiaries of Oceanografia. The final structure only had theOSX Goliath backing the bond.
Barbados has also extended the deadline on its debt tenderuntil 11:59pm tonight after receiving about USD144m in validtenders on its existing 7.25% 2021s and its 7.00% 2022s.
The sovereign is looking to fund the up to USD250m tenderthrough a new October 2025 benchmark bond, with initial pricethoughts set in the 8.75% area. As of the original expirationdate of September 30, Barbados had received USD57.538m intenders for the 2021s and USD86.223m on the 2022s.
Holders who tender before the new expiration date willreceive a total consideration of USD980 per USD1,000 inprincipal on the 2021s and USD960 on the 2022s.
The sovereign's roadshow ended yesterday. Deutsche Bank isacting as lead, with CIBC coming in as co-manager. Expectedratings are Ba1/BB+.
- Investment & Company Information