“I wake up every morning at the moment and think jeez, just don’t do anything to mess up the year today,” said one fund manager, currently posting gains of over 15% for his global opportunity fund and nearly 40% for his EM equities fund.
He said his concern is no longer maximising returns through to the end of this year but positioning for 2018.
“I think next year is going to continue to be good and I think central bank policy is going to remain pretty accommodative,” he said “So I’m trying to position to take advantage of structural improvements that could materialise.”
Bankers are however still insisting on inundating bond investors with Lat Am supply even at this late stage in the year. There is cash to be put to work but it is not being deployed with much enthusiasm.
Santander Chile, one of the region’s best rated names and a rare dollar issuer, left a few basis points on the table with a three year benchmark on Tuesday. And the latest non-bank lender to join the issuance ranks, Alpha of Mexico, was offering double digit yields
But both deals were done without much of a hiccup, suggesting underlying conditions remain strong, just that investors are becoming ambivalent about making big bets.
Indeed, one time market darling Colombia’s downgrade from S&P barely made a ripple, with CDS just 2bp wider and the sovereign’s 2027s down just 25 cents on Tuesday.
Political gyrations are also still keeping bond investors busy — pension fund reforms in Brazil, the Venezuela debt situation and Russia’s president Vladmir Putin announcing he will run for re-election are all keeping fund managers on their toes.
In the loans market, South Africa’s distressed Steinhoff has set up a meeting with lenders next Tuesday, following its revelation on accounting irregularities last week to provide banks with an update on its operational and financial situation. The company has at least seven syndicated loans outstanding through its various subsidiaries with the most recent being a €750m bridge loan due to mature in August next year.
Tullow Oil, which also operates in Africa, has signed $2.5bn of reserve-based lending facilities to refinance existing facilities. The facility, signed on November 29, is divided into a $2.4bn commercial facility from a syndicate of 13 banks and $100m from the International Financial Corp. Both are revolving, with a three year grace period, and mature on November 2024.
Over in the Middle East, deals are wrapping up before the Christmas break. Egypt’s Global Telecom has extended a $200m loan from Citi and ING by six months to June 15 2018.
Dubai’s GEMS Education scores 10 banks at the early bird phase of its syndication of a $1.25bn loan. The company is deciding the terms of the general syndication phase, which is expected to launch in the new year.
Kuwait’s Warba Bank has signed a $400m debut, after receiving double its launch amount of $250m in commitments. The three year loan pays a margin of 145bp over Libor.
Francesca Young, emerging markets editor, +44 (0)20 7779 7317
Virginia Furness, emerging markets deputy editor, +44 (0)20 7779 8299
Olly West, Latin America reporter, oliver.west@globalcapital.com
Bianca Boorer, emerging markets loans reporter, +44 (0)20 7779 8423
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