EM LATAM CREDIT: Empresas Copec (COPEC; NR /BBBneg /BBBneg) Investment Plans
Celulosa Arauco (CELARA; Baa3 /BBB- /BBBneg)
“Copec May Return to Debt Market; Continues to Shop Sonacol Stake” – BBG
Neutral for spreads
• Chile conglomerate Copec is seeking to fund its USD3.014bn capital expenditure plan. Chairman Roberto Angelini said at a shareholders meeting in Santiago that the company may issue in the debt market, according to Bloomberg.
• He reportedly said that 79% of the investment would be in their forestry division to fund the company’s large pulp project in Brazil which is due to begin construction this month.
• Copec projects a total cost of USD4.6bn for the project which when completed in 2027 will be able to produce 3.5 million tons of pulp.
• COPEC has so far only funded in the local Chile rates market while its forestry subsidiary Celulosa Arauco has a long history of funding in the international markets but hasn’t done so since 2019.
• CELARA has four USD bonds outstanding each for USD500mn. The 2030 notes were last quoted T+184bps and the 2050 notes T+176bps, demonstrating a technically driven flat credit curve which offers more absolute yield in the long end.
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US STOCKS: Late Equities Roundup: Off Highs, Discretionary, IT Stocks Leading
- Stocks remain firmer after the bell, momentum stalled midday after Pres Trump said he would announce additional tariffs on cars "shortly" and pharmaceuticals at "some point". Currently, the DJIA trades up 567.83 points (1.35%) at 42553.43, S&P E-Minis up 97 points (1.7%) at 5815.25, Nasdaq up 399.9 points (2.2%) at 18184.23.
- Consumer Discretionary and Information Technology sectors continued to lead gainers in the second half, retail buyers helping Tesla rally over 10%, outperforming other Discretionary sector shares: Deckers Outdoor +4.58%, Ralph Lauren +4.38%, Royal Caribbean Cruises +4.04% and Darden Restaurants +3.98%.
- Semiconductor makers buoyed the Tech sector in the first half as AI demand for high performance chips continued: Advanced Micro Devices +7.81%, Monolithic Power Systems +6.33%, Palantir Technologies +5.83%, NXP Semiconductors +4.96% and Arista Networks +4.46%.
- On the flipside, Utilities and Consumer Staples continued to underperform in late trade, independent energy providers weighed on the former: AES Corp -1.99%, NextEra Energy -1.17%, FirstEnergy Corp -0.99% and Consolidated Edison -0.68%.
- Meanwhile, Consumer Staples weighed by food producers & distributors: Brown-Forman -2.89%, Hormel Foods -2.70%, Kraft Heinz -1.63%, Bunge Global -1.28% and General Mills -1.26%.
EURGBP TECHS: Pierces The 50-Day EMA
- RES 4: 0.8530 76.4% retracement of the Aug 8 - Dec 19 ‘24 bear leg
- RES 3: 0.8494 High Aug 26 ‘24
- RES 2: 0.8474 High Jan 20 and a key resistance
- RES 1: 0.8428/8450 High Mar 18 / 11 and the bull trigger
- PRICE: 0.8364 @ 16:52 GMT Mar 24
- SUP 1: 0.8351/46 50-day EMA and pivot support / Low Mar 24
- SUP 2: 0.8321 61.8% retracement of the Mar 3 - 11 bull leg
- SUP 3: 0.8391 76.4% retracement of the Mar 3 - 11 bull leg
- SUP 4: 0.8241 Low Mar 3 and a key support
EURGBP remains in a retracement mode. The cross has recently breached 0.8369, the Mar 14 low, and attention is on the 50-day EMA, at 0.8351. The average marks a key short-term pivot level. It has been pierced, a clear break would undermine the recent bull theme and signal scope for a deeper pullback, towards 0.8321, a Fibonacci retracement. Key resistance and the bull trigger is 0.8450, the Mar 11 high.
BONDS: Bund Biggest Short In Europe Pi (1/2)
From our Europe Pi update earlier (PDF):
- German contracts are now all "short". Schatz, Bobl, and Buxl each carry that distinction, while Bund has become the biggest structural short in MNI Pi (at very short).
- Each contract saw trade indicative of short covering last week, with the exception of long-setting in Bobl.
