BBVA

Investors hoping for new investment grade corporate bonds this week may be disappointed, as widening spreads and falling equities make the market less tempting for issuers.

Mexico responded to the lower rates environment on Tuesday with an opportunistic $3.56bn liability management exercise, shrugging off any credit worries to issue at a very slim concession.

Mexico showed that even trickier credit stories could take advantage of the borrower-friendly rates environment, surprising many with a $3bn liability management exercise just two weeks after finance minister Carlos Urzúa resigned.

Cofco International, a commodities trading unit of China’s agri-products company Cofco, has increased its sustainability-linked loan to $2.3bn after receiving commitments from 21 lenders.

Real estate investment trust (Reit) Fibra Terrafina sold $500m of 10 year bonds on Monday, with hefty tightening allowing the borrower to price closer to its largest Mexican rival than expected.

Two Mexican companies announced bond roadshows on Monday, in combination with buybacks of 2022 notes, as Latin American borrowers continue to try to use liability management to take advantage of low rates to refinance debt.

Corporate bond issuance in Europe has slowed, though demand remains strong, as evidenced by new issues on Monday for A2A, the Italian multi-utility, with a debut green bond, and Logicor, the warehouses group. Bankers expect appetite to remain steady but for the pace of issuance to be more sedate than in recent weeks.

Renault issued a €1bn bond from its industrial arm on Monday, after a tumultuous few weeks in which the company had negotiated a (for now) abandoned merger offer from Fiat Chrysler Automobiles. The deal came amid a busy flurry of smaller issues.

Engie, the French electricity and gas group rated A3/A-/A, chose an otherwise quiet Friday in the European corporate bond market to issue a €1.5bn eight and 20 year green bond. The deal was more than twice oversubscribed.

A trio of Spanish banks hit the euro market this week, led by a popular offering of non-preferred senior bonds from CaixaBank.

Rating: A-/Baa1

Investors piled into deals for Spain and Italy on Wednesday despite the miniscule yields on offer, as the spectre of further easing of monetary policy looms large over the market.