Solid session for Latin American sovereigns; spreads mixed; Bolivia roadshow ahead

By Christine Van Dusen

Atlanta, Aug. 8 - Latin American sovereign bonds staged a late-day rally on an otherwise quiet Thursday that saw mixed spreads and light volumes for most emerging markets assets.

"A very quiet day in Central and emerging Europe, the Middle East and Asia, with bank holidays across the region for the end of Ramadan," a London-based analyst said. "Countries out today include Turkey, a large portion of the Middle East, and Singapore."

The Markit iTraxx SovX CEEME ex-EU index spread on Thursday opened 3 basis points tighter at 233 bps over Treasuries while the Markit iTraxx Crossover index spread - seen Wednesday at 398 bps - moved out 1 basis points on Thursday.

"Very little trading activity with spreads largely unchanged to slightly wider, although prices are 1/4-point to 1/2-point better on the Treasury move," the analyst said, noting that U.S. Treasuries opened at 2.59% on Thursday. "Very little in terms of company news."

But Latin American sovereign bonds saw prices move up and spreads tighten by as much as 5 bps, a New York-based trader said.

Bonds from Argentina were a standout, moving higher on the day on better volumes.

Also from Latin America, Bolivia has mandated BofA Merrill Lynch and HSBC to arrange a roadshow from Aug. 12 to 14, a market source said.

The marketing trip will begin in Lima and travel to Boston and Los Angeles before concluding in London and New York.

No other details were immediately available on Thursday.

Ukraine notes under pressure

In trading from Ukraine, sovereign bonds have been under pressure this week, moving lower, said Svitlana Rusakova of Dragon Capital.

"No apparent trigger," she said.

On the corporate side, State Export-Import Bank of Ukraine's (Ukreximbank) 2018s were "in good shape" while OJSC Oschadbank traded down about a point.

The 2018 notes from Ukraine's Donbass Fuel & Energy (DTEK) moved down to close at 97 after pricing at 98.989.

"It seems like the bond has some way to go to normalize its pricing," she said. "It is still 80 bps tight to the sovereign curve."

Lat-Am corporates widen

Spreads on Latin American corporate bonds are wider on the week, though narrower than on Wednesday, a New York-based trader said.

Paper from Brazil's Vale SA was mostly unchanged on the week while Petroleo Brasileiro SA (Petrobras) paper was about 5 bps to 10 bps wider, she said.

Volumes were fairly strong for corporate notes from Chile, with numerous inquiries reported for Corporacion Nacional del Cobre de Chile (Codelco) bonds.

"Colombia bank paper continues to trade poorly after [Bancolombia SA]'s weak results, helping to soften the entire sector," she said.

Bonds from Colombia's utilities fared better and saw buyers, she said.

Sellers for Mexican corporates

Corporate bonds from Mexico faltered in trading on Thursday, the New York trader said.

"We continue to see mostly sellers," she said.

The new $300 million 5 3/8% notes due 2023 from Mexico-based petrochemical company Alpek SAB de CV have "weakened and widened," she said.

HSBC and JPMorgan were the bookrunners for the Rule 144A and Regulation S deal.

The proceeds will be used for general corporate purposes, which may include the repayment or retirement of indebtedness.

Sellers were spotted for bonds from Mexico's Cemex SAB de CV, with the 2022 notes moving from 113¼ bid to 1103/4.

SK Innovation draws orders

South Korea-based SK Innovation Co. Ltd.'s recent $350 million 3 5/8% notes due 2018 was eight times oversubscribed, a market source said.

The notes priced at 99.638 to yield Treasuries plus 230 bps via Citigroup in a Regulation S deal.

SK Innovation is a Seoul, South Korea-based energy, lubricants and chemicals company that is part of SK Group.

Uruguay oversubscribed

The recent issue of $2 billion 4½% notes due 2024 from Uruguay drew a final book of $3.5 billion, a market source said.

The notes priced at 99.833 to yield Treasuries plus 187.5 bps with Deutsche Bank and HSBC in a Securities and Exchange Commission-registered deal, part of a tender offer.

The proceeds will be used to repay the purchase price of the bonds in the tender offer and for general governmental purposes.

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