Central America

Mexican conglomerate Fomento Económico Mexicano (Femsa) turned to international bond markets for the third time this year20 on Monday, clinching its tightest dollar funding of the year despite wider spreads.

US investment managers GMO and Greylock will again unite to begin negotiations with Belize after the government said on Wednesday it wanted to delay all bond payments until February.

Central American sovereign Honduras marked a new milestone for EM bond markets in the coronavirus era this week as it became the lowest-rated issuer from Latin America to issue during the crisis. Oliver West reports.

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.