LatAm Bonds

The Argentina turnaround story under former president Mauricio Macri turned out to be a castle built on sand. But slick execution of the country’s two year bond market fairytale between 2016 and 2018 can provide the new government with some guidance in dealing with investors now it is staring down the barrel of default.

Argentina’s dollar bonds climbed again on Monday after the issuer extended the deadline for a restructuring offer, as a change in tone from the government offered slight hope that an agreement can be reached.

The International Monetary Fund (IMF) looks likely to provide Peru with a flexible credit line of around $11bn as the South American country works to preserve it liquidity position.

Grupo Energía Bogotá (GEB), the electricity and gas distributor majority-owned by the District of Bogotá, Colombia, is looking to hit bond markets to raise around $400m as government-linked issuers dominate the Latin America primary markets.

Colombian airline Avianca filed for Chapter 11 bankruptcy protection in New York on Sunday, the same day that $66m of senior unsecured bonds matured and just five months after wrapping a distressed debt exchange that some thought had brought the airline back from the brink.

Latin American development bank Corporación Andina de Fomento (CAF) tapped US dollar markets for the first time this year on Thursday, raising $800m of three year money that it will use to partially fund a $2.5bn emergency credit line designed to support shareholder countries in dealing with the effects of the coronavirus pandemic.

South American development lender Corporación Andina de Fomento (CAF) offered price talk on Wednesday as it looks become the latest of a select highly rated group of Latin American issuers to tap bond markets.

Chile priced the tightest EM sovereign bond in the Covid-19 era on Tuesday, selling a dollar deal flat or inside its curve and tight to where neighbouring rival Peru had issued last month.

The top tier of emerging market companies and sovereigns are funding themselves at near pre-coronavirus levels, but there is stark inequality in the market. The vast majority of EM corporates will have to sit out a while longer as funding costs remain prohibitively high for triple- and double-B rated issuers, writes Oliver West.

Even as sovereign restructuring and debt relief top the agenda for emerging markets bond buyers, investors are showing faith in the top names in the asset class. Tuesday was Chile’s turn; the sovereign breezed its way through two currencies, notching a negative new issue premium in dollars and becoming the first non-European sovereign to issue in euros since the Covid-19 crisis began.

Argentine government bonds have sold off yet again as neither creditors nor the government appear willing to blink in a stalemate that is likely to lead the sovereign to default on May 22, when the grace period expires on $500m of bond payments.

Telecoms giant América Móvil on Monday became the first private sector non-financial company from Latin America to issue a bond since the coronavirus pandemic battered emerging market bond markets in March. But the company’s unique appeal to non-EM buyers means few conclusions can be drawn about appetite for genuine Lat Am companies.