NEW YORK, July 30 (IFR) - Brazilian credits enjoyed a rare day of stable price action on Thursday led by miner Vale, whose bonds were some 20bp narrower following the release of better-than-expected results.
The company showed a profit in the second quarter after suffering a string of quarterly losses due to sinking iron prices.
“It was a nice report from Vale,” one trader told IFR. “They have a structure that makes them more cost-efficient than others, and that has shown up in the numbers.”
The rest of the Brazilian credit complex was meanwhile trading flat to a few basis points tighter after a volatile few weeks culminated in S&P’s decision on Tuesday to assign a negative outlook to the sovereign’s BBB- rating.
“It was overdone,” said a second trader, attributing the dramatic price swings in large part to summer illiquidity. “We shouldn’t have seen a sell-off of this magnitude.”
Brazil’s 2025s were spotted at a 94.40-95.00 after falling all the way to 93.00 on Monday as investors reacted to the government’s dramatic downward revision of surplus targets last week.
Other market players feel that Brazil may be set for another bout of volatility, however, if Moody’s decides to maintain its negative outlook on a downgrade to Baa3.
Elsewhere some Argentina bonds were under pressure after the central bank and state-owned pension administrator ANSES sold dollar bonds to support the currency, according to Jorge Piedrahita, CEO of brokerage Torino.
Bonar 2024s were down about half a point at 94.50.
In Venezuela, stabilizing crude prices and increasingly strong poll numbers for the opposition ahead of December’s parliamentary elections were spurring a mini rally at the short-end of the sovereign curve.
“We will look back at the election as the beginning of changes in Venezuela,” said Piedrahita. “The Chavistas will face tremendous political pressures because the (electoral) defeat could be the largest in their history.”
Meanwhile in the primary markets, Telesites - the cell tower spinoff of America Movil - did not emerge today with an expected dollar offering after raising Ps15bn in the peso bond market on Wednesday.
Sagicor Financial, an insurance and financial services provider with operations in the Caribbean and the US, hired JP Morgan and Scotiabank to arrange fixed-income meetings in the US and Europe ahead of a potential USD-denominated 144A/Reg S bond issue.
Expected corporate ratings are BB-/B from S&P/Fitch.
Whispers of mid 6% are being heard on a US$750m 7NC3 from Sable International Finance Limited (Cable & Wireless), with pricing expected this week via BNP Paribas, JP Morgan, RBC and Scotiabank. Expected ratings are Ba3/B.
Brazilian conglomerate Cosan Overseas has wrapped up roadshows a week after marketing a possible 144A/Reg S bond offering.
Bank of America Merrill Lynch, Bradesco, Itau BBA, Morgan Stanley and Santander organized the meetings. Expected ratings are Ba2/BB/BB+ by Moody‘s, S&P and Fitch. (Reporting By Paul Kilby)