EM LATAM CREDIT: Vista Energy Argentina (VISTAA; Caa1 /NR /BB-) Acquisition
“Vista announces the acquisition of Petronas Argentina” – Vista Energy
Positive for prices
• Mexican based oil and gas E&P company with operations focused on the Vaca Muerta region of Argentina expands with the purchase of Malaysian national oil company’s Petronas’ subsidiary in Argentina that has a 50% stake in the La Amarga Chica fields with YPF owning the remaining 50%.
• Purchase price was about USD1.5bn comprised of USD900mn upfront, USD300mn to be paid in two future installments and 7% in stock of Vista Energy.
• The company said in its filing that Petronas Argentina’s total revenue for 2024 was USD909 mn and adjusted EBITDA during 2024 was USD667 mn.
• The total USD1.2bn in cash if financed with debt is roughly 2x 2024 EBITDA which is in line with the company’s current leverage, so we don’t see any ratings actions forthcoming.
• The company has the lowest operating costs in the region already according to Fitch and this acquisition will increase the company’s scale by about 50% so we see it as a positive development.
• VISTAA 2035s issued at 7.625% December 2024, last quoted 8.63%, having sold off 66bps April MTD. The bonds are quoted 11bps tighter than YPF (YPFDAR; Caa1 /B- /CCC) 2034s after being about 70 bps tighter back in January when YPF issued the new 9NC4Y 8 year average life bonds.
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FOREX: High US Front-End Yields and US Equities Boosting Cross/JPY
- Unsurprisingly, the post-data action in FX has been centred around USDJPY, with spot’s initial dip lower to 148.31 being swiftly faded as markets latched on to the stronger-than-expected control group reading and US two-year yields spiked as high as 4.06% post release.
- USDJPY has since traded back above 149.00, with the overnight session highs at 149.10 capping the topside for now. US equities gathering upside momentum has been assisting Cross/JPY in this regard, with strength for the likes of NZDJPY (+1.09%) and AUDJPY (+0.81%) standing out. As noted, initial resistance for USDJPY does not come in until 149.46, the 20-day EMA.
- There has been some tentative buying of treasuries in recent trade, as markets potentially digest the totality of the report and the weak discretionary spending in the US. Should the reversal gain any traction, and the equity rally lose steam, USDJPY’s bearish technical backdrop may prevail. 146.54 remains key on the downside, the March 11 low and the bear trigger.
EQUITIES: Rolla pace (updated)
Equity Roll pace, just looking at the Estoxx (VGH5) around 3/4 of the front Month's Volume is spread related now
- ESA: 35%.
- NQA: 22% (below pace).
- DOW: 31%.
- VGA: 25%.
- DAX: 22%.
- FTSE: 27%.
EQUITY TECHS: E-MINI S&P: (M5) Oversold But Remains Bearish
- RES 4: 5976.83 50-day EMA
- RES 3: 5864.25 Low Jan 13 and a recent breakout level
- RES 2: 5859.54 20-day EMA
- RES 1: 5726.75 High Mar 12
- PRICE: 5688.25 @ 13:29 GMT Mar 17
- SUP 1: 5559.75 Low Mar 13
- SUP 2: 5483.50 2.00 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 3: 5396.00 2.236 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
- SUP 4: 5341.87 2.382 proj of the Dec 6 ‘24 - Jan 13 - Feb 19 swing
The trend condition in S&P E-Minis remains bearish and fresh cycle lows last week reinforced current conditions. Moving average studies are in a bear-mode set-up highlighting a dominant downtrend. Sights are on 5483.50, a Fibonacci projection. Note that the short-term trend condition is oversold, a corrective bounce would allow this set-up to unwind. Firm resistance to watch is 5976.83, the 50-day EMA.
