Argentina, Petrobras drive price action in slow session
By Paul Kilby
NEW YORK, April 21 (IFR) - The looming release of Petrobras's financials and a local bond sale from Argentina were the main drivers of price action Tuesday in what was otherwise a quiet session for Latin American credits.
The beleaguered Brazilian oil company confirmed today that it would disclose its long-awaited audited 2014 financials after the close Wednesday, providing more support to bond prices.
Petrobras bonds were closing off their highs but spreads were ending tighter, with the 2024s being quoted at 450bp-440bp, tighter on the day by 5bps.
The moves were driven by hopes that the financials will disperse some of the concerns overhanging Brazilian credit and clear the way for new issuance from a country that has not seen one cross border bond this year.
The market will be focused on the size of potential write-downs and how the company manages the release of its numbers, bankers say.
"Everything is priced in so unless they come out with better than expected results, we are likely to trade sideways," said a New York-based trader.
Fallout from a corruption investigation at Petrobras and Brazil's flagging growth are also expected to linger and impact the country's corporate credit space, bringing more volatility in the months to come.
In a report released today, Moody's noted that Brazil had overtaken Russia as the country with the most potential fallen angels, with several credits from the South American country teetering on the edge of junk territory.
These included utilities ESCELA, AES Tiete, Bandeirante Energia, as well as construction firm Construtora Noberto Odebrecht.
Meanwhile, Argentina debt underperformed Tuesday after the government announced it planned to sell up to US$500m of Bonar 2024s through a local auction.
The sovereign has already suffered two failed attempts at selling the Bonar 24s in the open market - one locally and the other through international banks - as it seeks to bypass court injunctions in the US.
NML Capital - the lead holdout creditor - suggested today it could take legal action over the sale, though it remains unclear how many international investors - if any - will participate on this occasion.
Bonar 2024s fell to 105.00 earlier today on the news, and later recovered a touch to 105.50.
PIPELINE
Banco de los Trabajadores (Bantrab) will hit the road next week to market a possible subordinated debt offering through Deutsche Bank.
The Guatemalan bank, which focuses on payroll-lending to public sector employees, will be in Switzerland on April 22, New York on the 23rd and Miami on the 24th. The bank carries corporate ratings of Ba3/BB- by Moody's and Fitch.
ACI Airport Sudamerica, controlling shareholder of the concessionaire of Uruguay's Carrasco airport, mandated Bank of America Merrill Lynch and Nomura for investor meetings that concluded last week in London and Los Angeles.
A potential senior secured 144A/Reg S deal backed by future dividends from a long-term airport concession contract may follow.
Empresa Electrica Guacolda S.A. (Guacolda) has kicked off roadshows as it markets a senior unsecured 144A/Reg S USD bond. The borrower mandated Citigroup, GS and Itau as global coordinators, while Scotiabank is joint bookrunner.
The company was in New York today and will head to Boston and New York on April 22. Guacolda is owned 50% plus 1 share by AES Gener (Baa3/BBB-/BBB-), while the remainder is held by infrastructure fund Global Infrastructure Partners. Expected ratings are BBB-/BBB-.
Pacific Rubiales, the largest private oil producer in Colombia, has kicked off investor meetings through Bank of America Merrill Lynch, Citigroup and HSBC. The company heads to Santiago on April 30, Los Angeles on May 4 and Miami on May 6.
(Reporting by Paul Kilby; Editing by Natalie Harrison)
