Pacific Rubiales reopens dollar market

Pacific Rubiales reopens dollar market


Pacific Rubiales reopened the dollar bond market for Latin American firms Monday after a week-long hiatus, as US Treasuries rallied on expectations that Janet Yellen would be confirmed as chairwoman of the US Federal Reserve.

Yields on the 10-year US Treasury bond fell to 2.68% on Monday, 12 basis points tighter than this month’s high, reached on November 12. The lower yields came as investors reassessed their expectations on the continuation of quantitative easing, after Yellen spoke in favor of the program last week. Uncertainty over the length of the Fed’s $85 billion monthly quantitative easing program has troubled markets this year.

Pacific Rubiales opened books on a five-year non-call three transaction on Monday morning, capitalizing on the strong market tone. The Colombian-Canadian oil and gas exploration and production firm was last in the market in March, selling a $1 billion 10 year non-call five bond.

Monday’s deal was set to be the first dollar-denominated bond sold by a Latin American borrower since November 8. Brazilian bullet-maker Companhia Brasileira de Cartuchos (CBC Ammo) was the last Latin to sell a dollar bond, a $250 million eight-year non-call four transaction.

Others have looked at the market since, but stayed away.

Last week, Guatemalan sugar producer and exporter Ingenio Magdalena postponed plans to issue its first international bond. Rudy Maza, the issuer’s financial planning and risk manager told LatinFinance that volatility in US Treasuries was a factor, and said the firm would look at the market in 2014.

The decision came after Coca-Cola Femsa (KOF) met fixed-income investors the US earlier this month. The bottler has not since brought a transaction to market. LF

Full details of Pacific Rubiales' bond issue can be found in LatinFinance's Daily Brief.