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LatAm debt falls, drags down emerging market volumes
Debt issuance by Latin American governments and agencies fell, dragging down emerging market debt volumes despite increases elsewhere
Latin American debt markets were unable to match last year’s frantic start as the volume of international bonds issued by LatAm issuers in the first quarter of 2013 dropped by nearly 40% compared to the same time in 2012, according to data from Dealogic.
Total issuance dropped from $43.651 billion in Q1 2012 to $26.444 billion, despite emerging market volumes in other regions increasing.
LatAm’s decrease led global EM volumes to contract from $151.095 billion to $145.301 billion.
A lower volume of sovereign and supranational bond sales drove the decrease, as some governments look to reduce dollar issuance in an attempt to control currency rallies.
SSA issuance from LatAm fell from 13 deals totalling $10.088 billion in Q1 2012 to nine deals worth a total of $4.944 billion in the last three months.
Brazil and Peru, which together sold $1.8 billion of bonds in January 2012, have been absent from the markets so far this year.
Corporate and FIG volumes were also down. But although corporate issuance fell substantially, from $24.841 billion to $15.185 billion, the number of deals only dropped by five, from 36 to 31, pointing to a continued flow of bonds from debut issuers that usually require smaller amounts.
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A rush of debut bonds – five of them – helped Peru record what was by far its busiest ever quarter in global debt capital markets. Its total of nine deals – the previous record in any quarter was five – was beaten only by Brazil and matched only by Mexico.
But the total volume of Peruvian issuance of $2.838 billion meant the average bond from the country was only $315 million, versus an average of $680 million in Mexico, $658 million in Colombia, and $566 million in Brazil.
A strong growth story, consolidation in the corporate sector and the chance for companies to obtain what they consider excellent cost of funding are driving most businesses in Peru large enough to issue bonds to do so.
Lima-based bankers expect more inaugural bonds issues from the Andean country in the second quarter.
Brazil retains its place as the number one jurisdiction for international bond issues, with 15 deals totalling $8.491 billion for the quarter.
But while the 30 issues totalling $24.744 billion meant Brazil accounted for 57% of LatAm issuance a year ago, the most recent quarter’s numbers make up just 32% of the total.
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