Central America

Central American sovereign Honduras found strong demand on its return to bond markets as investors and analysts said the issue ticked all the boxes for a yield-hungry investor base.

The government of Belize will launch a consent solicitation in early July asking bondholders to agree to delay all interest payments due before February, it said on Wednesday. With a general election due in November, this would effectively leave the next government to decide whether further debt negotiations are required.

Honduras is planning to price a new 10-year bond on Wednesday after tightening guidance significantly as EM debt caught the US Federal Reserve-driven rally in fixed income markets.

Generals, and financial regulators, are always fighting the last war. So it proved when the coronavirus slammed into international markets in mid-March. Many of the tools developed in the 2008 financial crisis were deployed to great effect by central banks. The corners of the financial markets that propagated weakness in 2008 passed the test of 2020. But new risks were thrown up, forcing a new round of improvisation. What lessons will be drawn from the Covid-19 crisis?

Bond investors say that Honduras’s established relationship with the IMF should leave it in good stead as it looks to become the lowest rated borrower from Latin America to issue in the coronavirus era.

As the highest yielding sovereigns in Latin America — excluding those explicitly on the path to restructuring — bonds from El Salvador and Costa Rica have finally caught a strong bid. But fiscal fundamentals are deteriorating sharply.

For yield-hungry bond buyers, Central American sovereigns El Salvador and Costa Rica have proved irresistible in recent days. But as political infighting in both countries hampers fiscal consolidation efforts, fiscal fundamentals could cause creditors concern for years to come.

The Central American Bank for Economic Integration (Cabei) raised $530m-equivalent of debt in Taiwan and Switzerland this week to complete the bulk of its bond financing for the year, leaving the lender to focus on bilateral funding and further investor relations for the rest of the year.

Central American Bank of Economic Integration (Cabei) turned to the Taiwanese market on Wednesday, raising $375m just weeks after a $750m bond sale in the US.

Latin American bond bankers were hopeful that Cemex’s blowout bond issue on Tuesday could cajole other issuers into the market after the Mexican cement producer navigated volatile secondary market and a rating downgrade to notch a hefty order on the way to a $1bn seven-year bond.

The Central American Bank for Economic Integration (Cabei) is set to price a senior unsecured Formosa bond on Wednesday after tightening price discussions.

Mexican cement maker Cemex is likely to announce a new dollar bond first thing on Tuesday after holding investor calls on the same day Fitch downgraded the borrower and placed it on negative outlook.