By Paul McNamara of GAM
A rise in overall emerging market (EM) debt levels and an increase in US Treasury yields is causing many investors to look for a new crisis. The argument goes that developed market (DM) central banks cut rates to zero in response to the financial crisis, and capital flowed out of these economies in search for yield.
Corporate bonds issuance in EM increased, and because EM banks were in far better shape than their developed market counterparts, credit growth soared. A common concern among EM investors is the risk that when the US Federal Reserve tightens rates, capital inflows from DM to EM could reverse, causing GDP growth to collapse.
We believe that the risk of a collapse in EM growth prompted by capital outflows is much lower than is feared. EM fundamentals have adjusted substantially already: credit growth has slowed by 9 percentage points since its peak in mid-2011. Read more
By Pan Kwan Yuk and Samantha Pearson
UPDATE: It’s official. Petrobras has succeeded in raising $11bn on Monday, making it the biggest emerging markets issue EVER.
Final pricing came in slightly lower than initial guidance thanks to strong demand from investors. Yields for the six-tranche issue ranged from 2.14 per cent for the three-year notes, to 5.76 per cent for the 30-year bonds. The total size of the issue can still increase as underwriters has a so-called “greenshoe option” to sell 5 per cent more of the bonds to Asia investors. See original BB post after the jump. Read more
Chile has traditionally been, quite literally, a copper-bottomed investment.
Now Codelco, the state copper company, and Enap, the state energy company, are preparing international bond issues worth $2.5bn, according to financial newspaper Diario Financiero. Read more
Brazilians may have been a little miffed last night when Fitch upgraded Mexico’s foreign-currency debt one notch above Brazil’s but they soon got their own back by launching their biggest bond sale this year.
After eight months since the last sale of government bonds, Brazil finally seized the opportunity on Thursday and launched a $750m reopening of its dollar-denominated global bond due in 2023. Read more
Argentine companies have had few funding avenues open lately. The cost of borrowing has soared, given the country’s ongoing legal battle with US funds seeing full repayment of defaulted bonds, and raising money domestically has become more difficult given that YPF, the nationalised oil company that has been issuing debt like hot cakes in recent months, is crowding out the home market.
So IMPSA, an Argentine wind farm operator, is bucking the trend. Read more
To the list of unusual names that have been tapping the international bond market, investors could soon add this: Ecuador.
The Andean country’s finance minister, Fausto Herrera, said on Friday he plans to launch an exchange offer for holdout creditors – a move that could pave the way for a new sovereign bond sale. Read more
By Joe Leahy and Vivianne Rodrigues
After it saved the day last year for Brazil’s mournful initial public offering market by holding one of the country’s few successful listings, BTG Pactual is back with a bang in 2013 with the first major Latin American corporate bond issue. Read more
By Vivianne Rodrigues and Pan Kwan Yuk
Things just keep getting better and better for Mexico.
The country’s stock market is having a record-breaking run. Manufacturing is chugging along nicely. Consumer confidence is at a five year high. And now comes the cherry on the cake – long-term borrowing costs for Mexico this week fell to an all-time low. Read more
Just when you thought yields on Latin American corporate bonds couldn’t get any lower, along comes an issue that resets the price curve all over again.
Cielo, a Brazilian card-payment processor, on Friday launched $875m of 10-year debt at 225 basis points over US Treasuries, or roughly 3.86 per cent – the lowest price ever paid by a LatAm company selling new debt of that maturity. Read more
Uruguay has announced price controls on a host of supermarket staples to try to rein in inflation. That’s the kind of thing neighbouring Argentina often does.
But spot the difference. Uruguay is actually concerned about inflation, for one thing. Read more
It took a while – over ninety years since the last one and almost nine months since it was first announced. But Bolivia finally took the plunge into the global credit market on Monday, with the launch of a $500m bond issue. Read more
Roll-up, roll-up, come get your Latin American corporate bonds!
Empresa de Telecomunicaciones de Bogotá, a Colombian state-owned telecoms company, is looking to join the LatAm 2012 bond rush by selling $600m in ten-year dollar-denominated bonds. Proceeds from the issue, to be launched before the end of November, will be used to fund the expansion of ETB’s fibre-optic network. Read more
Nothing better captures the frenzy surrounding the Latin American fixed income market at the moment than Mexichem‘s $1.15bn two-tranche bond offering.
The issue – a 10-year, $750m bond yielding 4.875 per cent and a 30-year, $400m bond yielding 6.75 per cent – together attracted a whopping $17.5bn in investor bids. The oversubscription – at 15 times – is almost unheard of for the asset class. Read more
By Pan Kwan Yuk and Andres Schipani
Telefónica Colombia is set to become the latest Latin American company to cash in on investors’ voracious appetite for debt offerings from the region.
The company, which is jointly owned by Spain’s Telefónica and the Colombian government after a recent merger, is preparing to raise as much as $750m through the sale of 10-year dollar bonds on Thursday.
The issue has already attracted more than $6bn in investor bids as of Wednesday night, according to sources close to the matter. Read more
Call it the Jackson Hole effect. Or the Draghi bounce.
But after the August lull, the bond market in Latin America is roaring back to life again.
Emboldened by investors’ hunger for returns, LatAm companies and governments have wasted little time tapping international markets, raising some $5.7bn since the start of September, according to Dealogic. Read more
Hugo Chavez’s management of Venezuela’s economy may be a trifle unorthodox – to put it kindly – but there’s no doubting he has some competent technocrats on his economic team.
Whether the socialist leader pays any attention to his market-savvy advisers is another matter, of course, but this time it looks like he might have: the timing of a forthcoming debt issue could hardly be better. Read more
Many investors were looking aghast at Argentina last week, as the government announced the nationalisation of 51 per cent of the Spanish-owned oil company YPF.
But Arcos Dorados, the Buenos Aires-based franchisee for McDonald’s in Latin America and the Caribbean, seized the chance to end what Bloomberg reported was Argentina’s longest corportate bond drought in a decade.
The company issued another 275m reais ($147m) of real-denominated global bonds, due in 2016, at a 10.25 per cent yield, nearly four points above the Brazilian government’s global real bonds. Read more
Calling all bond-buyers out there: there’s a new sovereign coming to market soon. Boasts solid growth (5.1 per cent last year); six years of fiscal surplus, manageable public debt levels, rising central bank reserves and ratings agencies Moody’s and Standard & Poor’s both give it a positive outlook.
Its name? Bolivia. Read more
Des Moines, Iowa is best known for its corn fields; Milwaukee, Wisconsin for its beers and bratwursts. But for a small but growing number of blue chip companies from Latin America looking to raise cash, the Midwest – believe it or not – is also quickly developing a reputation as something of a fundraising hub. Read more