EM LATAM CREDIT: Prio: Mandate Investor Meetings
(PRIOBZ; Ba3pos/BB-pos/BB*+)
IPT 5NC2Y: N/A
FV 5NC2Y: 7.625% Area
• Brazil independent oil and gas exploration and development company Prio announced investor meetings ahead of potentially issuing USD benchmark size, 144A/Reg S senior unsecured 5NC2 year notes. Use of proceeds will be to tender for any and all USD600mn 2026 senior secured notes.
• Prio has a larger production profile than the other major Brazil independent oil and gas E&P company Brava Energia (RRRPBZ; NR/B+pos/BB-) so bonds should trade at a lower yield. RRRPBZ 31s were quoted at a YTW of 8.14% to the Feb 2028 call date. Prio should trade wider than Panamerican Energy (PANAME; B1/NR/BB-pos) based in Argentina, another independent oil and gas E&P in Latin America with a larger production profile than Prio and Brava with 2032 amortizing notes (WAL 5.5Y) yielding 7.35%.
• Outside of the energy space we have Brazil steel company CSN (CSNABZ; Ba3/BB-/BBneg) with 2030 bonds yielding 8.59% but a more volatile credit profile than Prio. A more defensive comparable would be Aegea (AEGEBZ; B1/NR/BB) with 2031 notes quoted 7% YTW to the Jan 2028 call. We would expect a more cyclical sector such as oil and gas to trade wider than a water utility like Aegea.
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Historical bullets
EURJPY TECHS: MA Studies Highlight A Dominant Uptrend
- RES 4: 177.08 2.000 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 3: 175.43 High Jul 11 ‘24 and a key medium-term resistance
- RES 2: 174.86 1.764 proj of the Feb 28 - Mar 18 - Apr 7 price swing
- RES 1: 173.02/97 High Aug 13 / High Jul 28 and the bull trigger
- PRICE: 172.35 @ 20:28 BST Sep 1
- SUP 1: 170.69 50-day EMA
- SUP 2: 169.73/45 Low Jul 31 / 23.6% of the Feb 28 - Jul 28 bull leg
- SUP 3: 168.46 Low Jul 1
- SUP 4: 167.46 Low Jun 23
EURJPY continues to trade below its recent highs. The trend structure is bullish and key support to watch lies at the 50-day EMA at 170.69. A clear break of the average is required to highlight a stronger short-term bearish threat. Note that moving average studies are in a bull-mode position highlighting a primary uptrend. Key resistance to watch is the Jul 28 high of 173.97. Clearance of this level would confirm a continuation of the bull cycle.
USDJPY TECHS: Support Remains Exposed
- RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
- RES 3: 150.92 High Aug 1 and a key resistance
- RES 2: 149.81 76.4% retracement of the Aug 1 - 14 bear leg
- RES 1: 148.78/149.12 High Aug 22 / 61.8% of the Aug 1 - 14 bear leg
- PRICE: 147.18 @ 20:19 BST Sep 1
- SUP 1: 146.21 Low Aug 14
- SUP 2: 145.86 Low Jul 24
- SUP 3: 145.40 50% retracement of the Apr - Aug upleg
- SUP 4: 145.19 Trendline drawn from the Apr 22 low
A bear threat in USDJPY remains present and the pair is trading closer to its recent lows. The short-term bear trigger lies at 146.21, the Aug 14 low. Clearance of this level would resume a downtrend that started early August and pave the way for an extension towards 145.40, a Fibonacci retracement. For bulls, a resumption of gains would instead open 149.12, 61.8% of the Aug 1 - 14 bear leg.
JGB TECHS: (U5) Bear Threat Still Present
- RES 3: 146.53 - High Aug 6
- RES 2: 141.48/142.95 - High May 2 / High Apr 7
- RES 1: 139.05 High Aug 4
- PRICE: 137.25 @ 19:48 BST Sep 1
- SUP 1: 137.00 - Round number support
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
A bear threat in JGB futures remains present and the contract is trading closer to its recent lows. A resumption of weakness would signal scope for an extension towards 136.57, a Fibonacci projection. The first important resistance to watch remains 141.48, the May 2 high. Clearance of this level would be viewed as a bullish signal. Initial short-term resistance is 139.05, the Aug 4 high. A breach would be a positive development for bulls.
