EM LATAM CREDIT: Province of Cordoba: New Issue Fair Value
(PDCAR; Caa2/-/CCC+)
“PRICED: Provincia de Cordoba $725m 7Y at Par to Yield 9.75%” – Bbg
IPTs 6Y: N/A
FV 6Y: 9.5% Area
• The Province of Cordoba priced a USD725mn senior unsecured 6-year weighted average life deal. The use of proceeds will be to tender for 2027 notes, pay for infrastructure projects and repay existing liabilities.
• PDCAR has 2029 amortizing notes with a 3-year average life yielding 9.07%. Among other Argentina provinces we see the oil rich Province of Neuquen (NEUQUE; -/B-/CC) has 2030 notes with a 2.5 year average life yielding 8.71%. Province of Mendoza (MENDOZ; Caa2/B-/-), one of the top Latin American wine producing regions, has 2029 amortizing notes yielding 8.45% to the 2-year average life.
• The industrial Province of Santa Fe (PROVSF; Caa2/-/B-) has 2027 amortizing notes yield 8.37% to the 1.4-year average life. Province of Chubut (CHUBUT; Caa3/-/CC), an oil producing region but with a weak debt service coverage ratio according to Fitch, has 2030 notes yielding 9.69% to the 1.7-year average life.
• Argentina sovereign (ARGENT; Caa3pos/CCC/CCC+) benchmark 2035 notes with a 7.5 year average life were last quoted 11.22%.
• The Province of Cordoba is the second most populous province in Argentina according to WorldAtlas and contributes about 8% to the country’s GDP according to Fitch.
• Fitch rated the prospective new notes CCC+, same as the sovereign, and had favorable comments regarding debt service coverage, liquidity and budget management. The province used to be rated above the sovereign until recently when the sovereign was upgraded to CCC+.
• The rating agency noted that 86.2% of Cordoba's debt is international issuance denominated in USD with total direct debt of ARS2,155.6 billion (USD1.8bn).
• Province of Cordoba restructured its debt in early 2021 to avoid a default.
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USDCAD TECHS: Resumes Its Downtrend
- RES 4: 1.4200 Round number resistance
- RES 3: 1.4111 High Apr 4
- RES 2: 1.3984/1.4016 50-day EMA / High May 12 and 13
- RES 1: 1.3882 20-day EMA
- PRICE: 1.3777 @ 07:58 BST May 27
- SUP 1: 1.3686 Low May 26
- SUP 2: 1.3643 Low Oct 9 ‘24
- SUP 3: 1.3579 1.500 proj of the Feb 3 - 14 - Mar 4 price swing
- SUP 4: 1.3503 1.618 proj of the Feb 3 - 14 - Mar 4 price swing
A downtrend in USDCAD remains intact despite Tuesday’s strength and the latest move down reinforces this theme. The pair has traded through support at 1.3751, the May 6 low. This confirms a resumption of the downtrend and maintains the sequence of lower lows and lower highs. Scope is seen for an extension towards the 1.3600 handle while further out, the move down opens 1.3420, the Sep 25 ‘24 low. Initial resistance is 1.3882, the 20-day EMA.
US TSYS: Bull Flattening In Return From Long Weekend
The cash Treasuries curve bull flattened Tuesday in the return to trading after the Memorial Day weekend.
- Global core FI was roundly boosted by soaring long-end JGBs on an overnight Reuters report that the Japanese finance ministry was considering shifting its issuance profile away from long-dated paper.
- Data broadly confirmed the narrative of US economic stabilization, with durable goods orders softer but not necessarily falling off a cliff in April, and Conference Board consumer confidence surprisingly bounced in May (though the so-called labor differential weakened in a possible warning sign for the labor market).
- In supply, the 2Y Note was well digested (1bp trade-through was the best since February), helping consolidate Treasury gains through the afternoon session.
- The June/September futures roll picked up where it left off last week, with most contracts now around two-thirds complete.
- Latest cash levels: The 2-Yr yield is down 1.9bps at 3.9723%, 5-Yr is down 5.1bps at 4.0298%, 10-Yr is down 7.1bps at 4.4397%, and 30-Yr is down 9.2bps at 4.9459%. The Jun 25 T-Note future is up 12/32 at 110-14.5, having traded in a range of 109-24.5 to 110-18.
- Wednesday's calendar includes more regional Fed surveys (Richmond services/manufacturing, Dallas services) and an appearance by FOMC's Kashkari, with supply including 2Y FRN and 5Y Note. We then get the minutes of the May FOMC meeting in the afternoon.
OPTIONS: US Options Roundup - May 27 2025
Tuesday's US rates options flow included:
- SFRU5 95.87/95.75ps 1x2, with 95.93/95.75ps 1x2, bought the strip for 3.25 in 5k
- SFRZ5 96.50/97.00cs vs 95.87p, traded for 3 in 2k
- SFRZ5 96.00/65.62ps 1x2, traded 11.5 in 3.5k
- TYN5 107.5 put bought for 4 in 20k
