A rally in Venezuelan debt and a sell-off in Argentine bonds made for a mixed trading session in Latin America's credit markets Friday. Argentine bonds weakened across the board Friday on concerns that a US court might bring more local-law bonds under an injunction that prohibits the sovereign from servicing the debt unless it also makes holdout creditors whole.
"Argentina was very heavy today as people are afraid of the legal risks. Bodens and Bonars were well offered," said a sovereign bond trader in New York. "But Venezuela and PDVSA are better bid."
Local-law Boden 2015s and Bonar 2024s, which are not currently covered by the injunction but are denominated in US dollars, ended half a point lower at 101.0-101.5 and 105.75-106.50 respectively.
"People are a little more nervous," said a second sovereign bond trader in New York.
The performance across Venezuela's curve, where some notes rose by more than a point, was particularly surprising considering that WTI and Brent crude prices respectively dropped by 5.8% and 5.1% today.
Traders attributed the bounce in bonds issued by the oil-rich nation to some short-covering and a rotation out of Argentina into Venezuelan debt.
Venezuela's 2022s, for example, were last quoted at a bid price of 66, or a point and a half higher.
Elsewhere in the region, Brazilian bonds ended the day mixed, with the short-end of the curve slightly tighter and the long-end a touch wider as bonds from state-run Petrobras suffered another bout of volatility.
Investors cheered the government's nomination of Vale's CEO Murilo Ferreira as chairman of the oil outfit, but remain nervous over the company's ability to deliver audited results in time to avoid any violations of its bond covenants.
Petrobras 2024s, were last spotted at a spread of 529bp, or 5bp wider compared to Thursday's close, after having traded as wide as 536bp earlier in the day.
Other Brazilian names entangled in the Petrobras corruption scandal, meanwhile, have been steadily recovering from recent lows. Braskem's 2020s and Odebrecht's 2042s, for example, were ending the day at 101-102 and 81-82, both roughly 10 points above the lows reached earlier this month.
Mexican media company TV Azteca is looking to pull the trigger on a rare project bond related to the development of Peru's fiber optic network as soon as Tuesday.
The senior secured notes will be backed by project cash flows and will be issued by special purpose vehicle Red Dorsal Finance Limited.
Final maturity will now fall in 2031, as opposed to the 2032 originally stated in the preliminary prospectus, while average life will be around 9.5 years. BESI - Grupo Novo Banco and Credit Suisse are the bookrunners on the deal.
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