Codelco prices notes; market eyes Fed decision; Venezuela/PDVSA rise in relief rally

By Rebecca Melvin

New York, July 25 – Corporacion Nacional del Cobre de Chile, or Codelco, priced $2.75 billion of senior unsecured notes in two tranches on Tuesday at yields that were well tighter than initial price talk.

The deals, including $1.5 billion of 3 5/8% notes due 2027 and $1.25 billion of 4˝% notes due 2047, were priced concurrently with announced tenders for several series of existing Codelco notes. The lighter yields on the new notes may encourage some investors to sit tight with older Codelco paper in view of how the older notes are yielding but with the premium offered on the tendered notes encouraging movement, a market source noted.

Final pricing came late in the day Tuesday with traders expecting secondary market action in the paper on Wednesday.

Elsewhere, dollar-denominated and euro-denominated emerging primary markets were quiet ahead of the wrap up of the U.S. Federal Reserve’s regularly-scheduled policy meeting on Wednesday. U.S. Treasuries sold off slightly ahead of the meeting amid some skittishness regarding how asset sales accumulated during years of monetary easing will be handled.

Back in secondary action, the bonds of Venezuela and its state-owned oil company Petroleos de Venezuela SA enjoyed a relief rally on Tuesday with much of the curve of both entities recouping about four points, following a hard drop for much of the last week, a New York-based trader said.

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