Brazil

Brazilian meatpacker JBS will look to continue on the road to recovery with a proposed benchmark-sized dollar deal next week, having received a ratings lift from S&P Global Ratings on Thursday.

Emerging market bond investors were as quick to highlight medium-term challenges in Brazil as they were to express relief at the outcome of the first round of Sunday’s presidential election, though DCM bankers highlighted improved prospects for primary markets.

Bond market analysts and investors warned that post-election market euphoria in Brazil could fade quickly even if right-wing populist Jair Bolsonaro, who has outlined a market-friendly economic plan, wins in the second round as seems likely.

Any bond market activity from Brazilian issuers before October’s elections will be focused on liability management, said DCM bankers after Braskem announced it would be redeeming some of its perpetual notes.

Brazilian pulp and paper producer Suzano Papel e Celulose’s CFO told GlobalCapital that he believes the company would have had to pay a higher rate on its latest dollar bond had it chosen to issue immediately after its roadshow.

Brazilian pulp and paper producer Suzano Papel e Celulose’s CFO told GlobalCapital that he believes the company would have had to pay a higher rate on its latest dollar bond had it chosen to issue immediately after its roadshow.

The Middle East is continuing its domination of the CEEMEA primary market and even the Latin America new issue market is starting to see some action as a run of successful bonds in the last fortnight is helping to bolster investor confidence.

Brazilian state-owned development bank Banco Nacional de Desenvolvimento Econômico e Social (BNDES) will buy back nearly $650m of existing bonds, including over half of its existing green bond.

Latin American DCM bankers are hoping that Brazilian pulp and paper producer Suzano Papel e Celulose gave the market the fillip it needed as the borrower enjoyed smooth execution on a surprise outing on Monday.

Syndicate bankers say more Latin American issuers could follow Argentine oil and gas company YPF and Brazilian state-owned bank BNDES in buying back existing bonds as low dollar prices make tenders attractive and can provide investors with liquidity.

As the market waits for Brazilian banks to launch the first covered bonds out of the country, market participants from the country say it provides the lenders with a useful new instrument. But whether they can reach investment grade status in euros or dollars depends on currency risk mitigation, according to a Moody’s official.

Brazilian state-owned development bank BNDES is looking to buy back up to $1.65bn of existing debt after launching tender offers for two dollar bonds.