EM LATAM CREDIT: Arcor: Mandates Investor Calls – New Issue Fair Value
(Caa1/NR/B+)
"MANDATE: Arcor S.A.I.C. to Hold Investor Calls Starting Monday
Arcor intends to provide notice to redeem in full its 8.250% Senior Notes due 2027" – Bbg
IPTs 7Y WAL: N/A
FV 7Y WAL: 8.25% Area
• Argentina based Latin American consumer foods and packaging company Arcor mandated investor calls and potential issuance of USD benchmark senior unsecured 7-year average life notes. The proceeds will be to redeem in full its 8.25% 2027 senior notes, with about USD190mn outstanding.
• In the high yield consumer sector, we can observe higher rated Colombia based Grupo Nutresa (NUTRES; Baa3/NR/BB+), also in a politically challenged country, with 2030 notes yielding 6.75% and 2035 notes at 7.68%. We note that ARCOR’s ratings are limited by the sovereign ceiling due to the company’s exposure to Argentina as are its fundamentals and ultimately its trading levels.
• Vista Energy (VISTAA; Caa1/NR/BB-) 2033 with a 6.9-year average life priced June 2025 at 8.5% were last quoted 7.89%. We think ARCOR notes should trade wide to that as only 30% of sales are produced outside Argentina so the ability to generate hard currency in case of a financial crisis would be more limited than Vista that has most of its revenues generated in USD.
• ARCOR should trade at a lower yield than domestically dependent Telecom Argentina (TECOAR; Caa1/B-/B) which has 2033 amortizing notes with an average life of 7.3 years that were last quoted 8.79%.
• Arcor's Argentina sales are 70% of the total and 85% of its EBITDA according to Fitch Ratings. The company generated about 8% of sales in Brazil and 10% in Andean region (Chile, Peru, and Ecuador) while the remaining 12% were in Mexico, the U.S., and Africa. Arcor’s debt leverage was expected to be 2-2.5x going forward according to Fitch.
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USDCAD TECHS: Corrective Cycle
- RES 4: 1.4111 High Apr 4
- RES 3: 1.4016 High May 12 and 13 and a key resistance
- RES 2: 1.3832/1.3920 50-day EMA / High May 21
- RES 1: 1.3747 High Jun 19
- PRICE: 1.3733 @ 16:23 BST Jun 20
- SUP 1: 1.3540/3521 Low Jun 16 / 1.0% 10-dma envelope
- SUP 2: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 3: 1.3473 Low Oct 2 2024
- SUP 4: 1.3410 1.764 proj of the Feb 3 - 14 - Mar 4 price swing
The trend needle in USDCAD points south and this week’s recovery is considered corrective. Resistance at the 20-day EMA, at 1.3710, has been pierced. A continuation higher would signal scope for a stronger retracement and expose pivot resistance at the 50-day EMA, at 1.3832. For bears, a reversal lower and a resumption of the downtrend would pave the way for an extension towards 1.3521, envelope-based support.
LOOK AHEAD: Next Week's Key US Data Releases
US data is headlined by Thursday’s Q1 GDP revisions and Friday’s PCE report for May although there are plenty of other releases that will be watched with interest throughout the week.
- Q1 GDP data will be “stale”, especially being a third release, but it will nevertheless help the Fed assess whether its previous view on the economy is playing out. Recall that Powell at the May FOMC press conference said he expected consumption and inventories to have increased more strongly than first reported in the flash release. Last month’s second release showed that only partly played out, with inventories revised even higher but consumption revised down from 1.8% to 1.2%. Nevertheless, Powell at Wednesday’s June FOMC press conference still described the downward revised 2.5% for PDFP as “solid”.
- The May PCE report should be more impactful for clues on latest consumer momentum amidst strong income growth. Retail sales saw the largest monthly drop since March 2023 although the closely-watched control group was stronger than expected. As for inflation metrics, core PCE is seen around 0.15% M/M in May judging by unrounded estimates after the usual CPI, PPI and import price inputs, after 0.12% M/M in April.
- As for the other releases to watch, Monday’s preliminary June PMIs will give timely updates on wider activity after Empire and Philly Fed manufacturing surveys remained in contractionary territory. We also expect greater than usual focus on housing data (existing home sales Mon, new home sales Wed) after what have been some troubling releases across both construction and sentiment. Tuesday then sees the Conference Board consumer survey for an alternative look at the improvement since the de-escalation in trade policy before Wednesday’s advance trade data for the latest post tariff front-running update.
US TSYS: Tsys Narrow/Higher Range, Trump Been "Speaking to Iran"
- Treasuries look to finish higher Friday, top half of narrow range. Early risk-on tone followed unscheduled comments from Fed Governor Waller on the possibility of a rate cut in July and headlines that Iran was ready to discuss limitations on uranium enrichment plans.
- No market reaction to late Pres Trump comments to reporters & social media posts: "WILL MAKE TRADE DEAL WITH INDIA, PAKISTAN," "BEEN SPEAKING TO IRAN," "IRAN WANTS TO SPEAK TO US, NOT EUROPE" - Bbg posts. Trump adds Europe is not going to help with Iran, nor will China; Trump "might" support Israel/Iran ceasefire
- The price details of the Philly Fed manufacturing survey for June showed a pullback from elevated rates for both prices paid and prices received in the current period. Six-month ahead expectations for prices paid pushed higher again though, and at 68.9 is getting closer to the high of 77.8 from Jan 2022, although prices received isn’t quite as relatively elevated.
- Tsy Sep'25 10Y futures trades +5 at 110-30.5 vs. 111-03 high, remains below key resistance and its recent high of 111-14+, a Fibonacci retracement and the Jun 5 high. Clearance of this hurdle would be bullish and highlight a stronger reversal. This would open 111-30, a Fibonacci retracement.
- Curves steeper, 2s10s +2.611 at 47.137, 5s30s +3.530 at 93.143. 10Y yield at 4.3791% vs. 4.3593% low. Projected rate cut pricing back to 50bp by December.
- Cross asset: Stocks mixed (DJIA +29.34 at 42,202.0, SPX eminis -20.75 at 6013.5), Gold mildly lower at 3365.05, Bbg US$ index little firmer at 1210.80 +1.10.
