EM LATAM CREDIT: Argentina's Vista Energy Potential New 7-Year WAL New Issue FV
Vista Energy Argentina (VISTAA; Caa1 /NR /BB-)
IPTs 8Y Final, 7Y WAL: N/A
FV 8Y Final, 7Y WAL: 8.5% Area
• Mexico based Vista Energy’s Argentina subsidiary has mandated investor meetings and proposed a potential USD benchmark senior unsecured 8-year final, 7-year weighted average life (WAL).
• VISTAA 2035 amortizing notes with a 9.5-year WAL were last quoted 8.22%, 23 bps higher QTD and 53bps higher YTD. We think this new issue should reprice the existing VISTAA 2035s as we may see a generous new issue concession.
• Within the past two weeks the market has absorbed three new Argentina corporate bond issues. Investors have become more optimistic about Argentina’s prospects given the recent IMF agreement, lifting of most capital controls, economic reforms and declining inflation rates.
• Broad-based acceptance for Argentina corporate bonds is still limited so healthy concessions will still be required prior to the legislative elections in October.
• As an estimate for what the curve is worth going from the outstanding VISTAA 9.5-year WAL notes to the potential 7-year WAL notes we can look to the bond curve for Argentina government-controlled energy company YPF (YPFDAR; Caa1/B-/CCC+). YPFDAR 2034s vs 8.75% 2031 is about a 40-bps yield differential for a two-year WAL difference.
• We also consider Argentina oil and gas exploration company Pluspetrol (PLUSPE; B3/NR/BB) 7-year notes recently issued at 8.75%, quoted 8.5%. We can also look to Brazil based independent oil and gas exploration company Brava Energia (RRRPBZ; NR/BB-/BB-) with 2031 notes at 10.1%.
• The Brent oil price is down 13% this year and was down almost 20% YTD a few weeks ago so investors are understandably cautious.
• Please see our post on Vista’s first quarter 2025 earnings:
https://mni.marketnews.com/3T5g0lc
• We also posted on Vista’s acquisition of Malaysian Petronas Vaca Muerta assets: https://mni.marketnews.com/42EI6bn
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USDCAD TECHS: Hits Bear Trigger, New Cycle Low
- RES 4: 1.4415 High Apr 1
- RES 3: 1.4296 High Apr 7
- RES 2: 1.4087 50-day EMA
- RES 1: 1.3906/3935 High Apr 17 / 20-day EMA
- PRICE: 1.3793 @ 17:00 BST May 2
- SUP 1: 1.3760 Low Apr 21 and the bear trigger
- SUP 2: 1.3744 76.4% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 3: 1.3696 Low Oct 10 2024
- SUP 4: 1.3643 Low Oct 9 ‘24
The trend set-up in USDCAD deteriorated further Friday, with prices slipping through the bear trigger to narrow the gap with next support. The fresh cycle low reinforces the bear cycle and signals scope for a continuation near-term. Potential is seen for a move towards 1.3744, a Fibonacci retracement. Moving average studies are in a bear mode position, highlighting a dominant downtrend. First resistance to watch is 1.3943, the 20-day EMA.
AUDUSD TECHS: Consolidation Phase
- RES 4: 0.6550 61.8% retracement of the Sep 30 ‘24 - Apr 9 bear leg
- RES 3: 0.6528 High Nov 29 ‘24
- RES 2: 0.6471 High Dec 9 ‘24
- RES 1: 0.6470 High May 2
- PRICE: 0.6445 @ 16:59 BST May 2
- SUP 1: 0.6344/6316 Low Apr 24 / 50-day EMA
- SUP 2: 0.6181 Low Apr 11
- SUP 3: 0.6116 Low Apr 10
- SUP 4: 0.5915 Low Apr 9 and key support
AUDUSD remains inside a consolidation phase, having traded either side of the 0.6400 level for 10 consecutive sessions. The underlying trend remains bullish and the pair is trading close to recent highs. Price has recently breached a key resistance at 0.6409, the Dec 9 ‘24 high. This breach reinforces bullish conditions and signals scope for a continuation higher near-term. Sights are on 0.6471 next, the Dec 9 2024 high. Initial key support to monitor is 0.6316, the 50-day EMA. A clear break of this EMA would be a concern for bulls.
US TSYS: Rates Retreat, Sentiment Improved Though Trade Risk Remains
- Treasuries look to finish near late Friday session lows after trading firmer on the open, higher than expected Nonfarm payrolls at 177k (sa, cons 138k) of which private contributed 167k (sa, cons 125k) triggered the early reversal.
- However, two-month revisions of -58k offset the 39k beat for nonfarm payrolls, with a similar story for private (a 42k surprise vs -48k two-month revision).
- Stocks are back near four week highs - pre-"Liberation Day" levels as hopes of some trade deal being made improved sentiment.
- The Wall Street Journal reports that "Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade... potentially offering an off-ramp from hostilities to allow for trade talks to start." The Journal notes that "discussions remain fluid" and China "would like to see some softening of stance from President Trump".
- Currently, the Jun'25 10Y contract trades -20 at 111-07.5 vs 111-02 low -- initial technical support (50-dma) followed by 110-16.5/109-08 (Low Apr 22 / 11 and the bear trigger). Curves bear flattened, 2s10s -3.480 at 48.002, 5s30s -4.911 at 86.807.
