LatAm Bonds

This time Petrobras’s dollar benchmark wasn’t a record-breaker, but $8.5bn raised in six tranches towards the Brazilian oil company’s $221bn investment programme for 2014-2018 left bankers on the deal happy and those away from it full of praise.

Banco Daycoval has released initial price thoughts of the mid-to low 6% yield area for a $300m five year deal, in line with debt bankers’ predictions of fair value based on the borrower’s outstanding curve.

Bankers said the Mexican high yield market had overcome last year’s homebuilders crisis and was open to new deals after BB rated financial Credito Real’s latest bond performed well in the secondary market. Moreover, a fraud investigation into oil services company Oceanografia is unlikely to have a broader effect on the Mexican high yield market.

Citi’s Mexican arm Banamex missed out on a rating upgrade from Moody’s after having to revise its 2013 results downwards as the result of fraudulently filed invoices under an account receivable programme for oil services company Oceanografia.

Mid-sized lender Banco Daycoval began meetings with bond investors on Thursday and is likely to choose a five year maturity for a potential new bond issue, according to a banker close to the lender.

Mexican financial Crédito Real attracted a bumper book for only the second LatAm dollar issue since January 31 on Thursday afternoon though more supply is needed to quench the market’s thirst for paper, according to traders.

Argentina’s state-owned oil company, YPF has offered bondholders in its 15-year old $100m bond due 2028 to swap into its latest new issue. Though the exchange would reduce the average tenor of YPF’s dollar debt, it would reduce interest costs.

Latin American secondary bond markets continue to grind tighter and are in desperate need of primary supply, say traders. And turmoil in the Ukraine should not lead to contagion for LatAm issuers.

Paraguay is contemplating raising a $1.5bn international bond as part of the national government’s 2014-2018 investment plan of $16bn, according to finance minister Germán Rojas.

Citi adjusted its 2013 results downwards on Friday as oil services company Oceanografia’s creditors continue to suffer from the company’s suspension from being awarded new Mexican government contracts. As the company’s bonds plunged into the teens, investors said the situation was a reminder of the risks of buying unrated corporates.

Mid-sized lender Banco Daycoval will hit the road for investor meetings when carnival celebrations are over in Brazil and is likely to choose a five year maturity for a potential new bond issue.

Banco Daycoval is returning to the international bond market for the first time in three years. The borrower has picked banks for a dollar deal and begins a series of investors meetings on Thursday.