EM LATAM CREDIT: New 7-Year: Sura Asset Management (SUAMSA; Baa1 / NR /BBB)
IPTs: T + 265 Area
FV: T + 225bps area
• Colombia based non-bank financial assets manager Sura Asset Management proposed to issue a new USD benchmark size senior unsecured 7-year note. The company announced an offer to purchase for cash up to USD175mn of the outstanding 2027 notes.
• Sura Asset Management is well diversified by geographic region but is 93% owned by Colombia based holding company Grupo Sura. We can look to Colombia regulated utility Grupo Energia Bogota (GEBCB; Baa2neg /NR /BBBneg) 2033s at T+181bps. Colombia recently priced a 5-year which is last quoted T+320bps.
• In investment grade rated financials, we have Mexican bank BBVA Bancomer (A3 neg/ BBB /BBB pos) with short five-year notes issued September 2024 at T+165bps last quoted T+119bps. A new BBVASM senior 7-year note would theoretically price around T+150bps, and we see Sura trading wider than that.
• We also looked at Chilean Banco Credito de Inversiones (BCICI; A2 /A- /A-) with a 6.5-year quoted T+135bps. We also considered Chilean utility Colbun (COLBUN; Baa2/BBB/BBB+) with 7-year notes quoted T+118bps.
• We considered Mexican retailer Liverpool (LIVEPL; NR/ BBB/ BBB) with 7-year notes quoted T+182bps.
• Sura specializes in pension asset management with operations in México, El Salvador, Colombia, Peru, Chile and Uruguay. Ratings at Fitch are stand alone and not tied to where the company or its parent, Colombia’s Grupo Sura, are based.
• Moody’s does consider the rating of the countries where the company has major operations and currently has both Colombia and Mexico on negative outlook which should be factored into pricing for the new issue.
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AUSSIE 10-YEAR TECHS: (M5) Strong S/T Bounce
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.915 - High Apr 4
- PRICE: 95.860 @ 16:42 GMT Apr 04
- SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.640 - 1.0% 10-dma envelope
Aussie 10-yr futures extended a recent strong bounce through to the Friday close, putting prices through the top end of the recent range. The confirmed breach of 95.851, the Dec 11 high on the continuation contract, reinstates a bull cycle and focuses attention on resistance at 96.207, a Fibonacci retracement point. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
USDCAD TECHS: Bearish Structure
- RES 4: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 3: 1.4415 High Apr 1
- RES 2: 1.4308 50-day EMA
- RES 1: 1.4242 High Apr 4
- PRICE: 1.4196 @ 17:10 BST Apr 4
- SUP 1: 1.4028 Low Apr 3
- SUP 2: 1.3986 Low Dec 2 ‘24
- SUP 3: 1.3944 61.8% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 4: 1.3894 Low Nov 11 ‘24
USDCAD rallied Friday, but remains lower on the week after Thursday’s downleg. The move down has confirmed a clear reversal of the bull cycle between Sep 25 ‘24 and Feb 3. Price is through a key support at 1.4151, the Feb 14 low. This signals scope for an extension towards 1.3944, a Fibonacci retracement. On the upside, key short-term resistance is seen at 1.4308, the 50-day EMA.
CANADA DATA: Unexpected Jobs Contraction Boosts Implied April BOC Cut Chances
Canadian employment unexpectedly contracted in March, falling by the most since January 2022 at -32.6k (+10.0k expected, +1.1k prior) in a sign that the trade war with the US is spilling over increasingly into the "hard" data. The unemployment rate ticked up 0.1pp to 6.7%, in line with expectations and below the November 6.9% high, though unrounded it rose from 6.55% to 6.71% - the largest increase since November.
- The drop in employment was largely due to a 62.0k drop in full-time positions (after -19.7k, the 2nd straight drop), with part-time up for the 4th consecutive month at 29.5k (after 20.8k prior) - that mix is clearly indicative of hiring uncertainty among firms.
- The monthly full-time drop was the 2nd largest since the pandemic lows in the labour market (April 2020). Goods producing jobs fell by 12k (2nd consecutive decline), while services shed 21k (wholesale/retail trade and Information, culture and recreation led losses).
- The participation rate dipped 0.1pp to 65.2%.
- Wages were soft, dropping 0.2% M/M for the first drop since November, with the Y/Y rate slipping to 3.6% from 3.8% prior. The rise in permanent employees' wages of 3.5% Y/Y was well below the 4.1% expected (4.0% prior).
- Market-implied probability of an April BOC rate cut rose to as high as 68% after the data before settling the day at around 55%. That compares to 40% prior to Wednesday's US tariffs announcement.
