Re: Jeffrey - Mexico -> MBONO 30y look interesting [C]
Jeffrey:
Please find the chart of PDVSA 5% 10128/15 price history below, as well as a description of the USDJPY 10yr trade that we briefly discussed on Friday. Speak with you soon, Tazia
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do you think money good in 15
Looping in Vinit here as he was recently involved with a large offering in the pdvsa credit and may have some take-aways.
My view is the bonds are money good in 2015, as of now, but you are not looking for yield carry (as discussed), and the risks of restructuring and near-term downside due to politics specific to venezuela and chatter around EM assets at large are likely greater than implied by the bonds' current —85 levels; would use Friday's rally to sell (particularly if you believe it was rates driven vs credit). For what it's worth, we've found Latam family offices that are very familiar the credit (and do like carry) are fully loaded and do not have incremental demand.
Tazia Smith
Director
Key Client Partners - US
Deutsche Bank Securities, Inc.
Deutsche Asset & Wealth Management
345 Park Avenue - 26th Floor
New Y rk NY 10154
Tel: (
Mobil
Fax:
E-mail:
This attached image shows the current pricing on the curve, which is slightly weaker than it was in early December. I have also added the term structure of PDVSA and VENZ sovereign bonds, which gives us some relative value across the curve
Bouts of volatility will likely remain an issue and therefore it will trade like a short tail risk trade. However, given that access to dollars remains key for Venezuela, we should expect the government to do whatever they can to avoid a problem servicing these bonds (or even the perception of the same). They do have a heavy amortization schedule in 2014 and 2015.
Vinit Sahni Managing Director | Global Head - Professional Client Group & Key Client Partners Capital Markets Group
Deutsche Asset & Wealth Management
105/108 Old Broad St/Pinners Hall), EC2N 1EN London, United Kingdom
Tel. +44(
Mobile+
Passion to Perform
thanks , lets keep
Jeffrey - was looking for value in the EM space, post the PDVSA analysis, started looking at Mexico...
here is a trade I think makes sense -> buying MBONO 30y unhedged
At around 7.5% yield, inflation probably in the 3-4% in the foreseeable future, and USD/MXN likely stable or stronger in real (deflated) terms, I think it is good value. The curve is steep. If you look at 10Y10Y UST and 10Y10Y MXN yields, the spread is above 500bp . Say inflation differential is 100bp higher in Mex and credit diff is 100bp (10Y CDS is about 100bp higher in Mexico although Mex has much better debt dyn), this still leaves about 300bp of cushion for real depreciation per year...ln sum, it seems good value
near term mark to market risk is slower pace of implementation of energy reform and a selloff in USTs
happy to discuss further if u find interesting...
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Jeffrey - sorry, to clarify is it 3m USD worth of MXN bonds or 3m MXN, as its a local currency bond.
As soon as NY gets in will get a price on the MBONO 7.75% 11/13/2042 and ping u
as and when our view on rates or the currency changes will keep u updated, as here u have risk on both components unlike the PDVSA where the bond was denominated in USDs.
Best
Vinit
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Vinit Sahni Managing Director I Global Head - Professional Client Group 8 Key Client Partners Capital Markets Group
Deutsche Asset 8 Wealth Management 1051108 Old Broad St (Pinners Hall). EC2N 1EN London. United Kingdom
Tel. +
kbbil
Email
Any proposed ideas are being delivered to you by the DeAWM Key Client Partners ('KCP") London desk for discussion purposes only, and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("DE'). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID). who understand the strategy. characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the relevant internal approvals prior to execution.
Passion to Perform
got it
back to u as soon as NY opens up
Vinit Sahni
Managing Director I Global Head - Professional Client Group 8 Key Client Partners Capital Markets Group
Deutsche Asset & Wealth Management
105/108 Old Broad St (Pinners Hall),
EC2N 1EN London United Kingdom
Tel.
Mobi
Email
Any proposed ideas are being delivered to you by the DeAWM Key Client Partners ("KCP') London desk for discussion purposes only. and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("Dr). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID). who understand the strategy.
characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the relevant internal approvals prior to execution.
Passion to Perform
as its local currency all the liquidity is in NY hours so it won't hurt. As soon as they get some liquidity will shoot it across.
Vinit Sahni Managing Director I Global Head - Professional Client Group 8 Key Client Partners Capital Markets Group
Deutsche Asset & Wealth Management 105/108 Old Broad St (Pinners Hall), EC2N 1EN London, United Kingdom
Tel. +
Mobil
Email
Any proposed ideas are being delivered to you by the DeAWM Key Client Partners ("KCP") London desk for discussion purposes only, and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("DB-"). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID). who understand the strategy. characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the
relevant internal approvals prior to execution.
Passion to Perform
Jeffrey - trying to wake people up in Mexico now. its 7am so sending some coffee across to Mexico...we are on it as soon as we get prices the NY crew will reach out to u.
Vinit Sahni
Managing Director | Global Head - Professional Client Group & Key Client Partners Capital Markets Group
Deutsche Asset & Wealth Management
105/108 Old Broad St (Pinners Hall),
EC2N-4EN United Kingdom
Tel. -
Mobile +447920-136521
Email
Any proposed ideas are being delivered to you by the DeAWM Key Client Partners ("KCP") London desk for discussion purposes only. and do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("Dr). These ideas are for the consideration of the intended recipients of this mail only. The KCP London desk does not provide investment advice. All intended recipients are Professional investors (as defined by MiFID). who understand the strategy. characteristics and risks associated with any ideas proposed herein and will be able to evaluate it independently. All trades on proposed ideas shall be subject to the
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relevant internal approvals prior to execution.
Passion to Perform
agreed lets do 3m
usd 3m bonds
can we set up an account based in london , so i do not have to wait for ny to open?
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it was a more general question
Jeffrey-
We just tried calling you. We have an indication on the MBONO's at 7.50% yield for 3MM USD but they move around a bit. Let us know your thoughts and if you'd like us to work an order.
You can call either Vahe or myself here in NY.
Thanks,
Raphael
Raphael Zagury, CFA
Managing Director
Head of Key Client Partners Latin America
Deutsche Bank Securities Inc.
Deutsche Asset & Wealth Management
345 Park Avenue, 26th Floor
New York, NY 10154
Tel. 2
Email