LatAm Bonds

In a shortened week in the US there was still time for heavy volatility in Lat Am bond markets, with sharp moves in Mexico particularly concerning for DCM bankers.

Some Latin American DCM bankers think the year is over for new issuance, and several are indeed wishing it already were. Though much of what put the brakes on in Lat Am this year will continue to affect the market in 2019, bond bankers should find reasons to believe January will be better.

Investors in Latin American bonds are giving thanks this week, as Wednesday brought some small respite on Wednesday ahead of Thursday’s US holiday. Some of the region’s more battered paper rallied slightly — though the consensus is still that issuance is finished for the year.

Bankers insist that the market, though deserted, is still open for at least a couple more weeks, but with the new issue premiums investors are demanding, it is difficult to persuade issuers to print.

Société Générale has agreed to pay $1.34bn in fines and an enhanced monitoring programme for violating US sanctions against Cuba, Iran, Sudan, Libya, Myanmar and North Korea, according to notices issued by US agencies on Monday.

Colombian oil company Frontera Energy is increasing the reward bondholders will earn if they give it permission to make more payments to shareholders.

Some Latin American DCM bankers think the year is over for new issuance, and several are indeed wishing it already were. Although much of what put the brakes on in Lat Am this year will continue to affect the market in 2019, bond bankers should find reasons to believe January will be better.

The two A-rated new issues shown to Lat Am bond buyers last week both traded well on Friday, but it was a different story for the bulk of the region as bankers have little hope of deals during the Thanksgiving week.

A strong bond market return from Bermuda on Thursday did little to cheer Latin America DCM bankers about prospects for the rest of the year as Brazilian paper company Klabin became the latest company from the region to wait after completing investor meetings.

Latin American DCM bankers say that continued debt buy-backs by Brazilian companies are creating strong technicals that should put the market in good stead for next year.

South American development bank Corporación Andina de Fomento (CAF) sold its first public dollar deal in a year on Thursday, raising $750m despite tough market conditions.

Colombo-Canadian oil and gas company Frontera Energy’s attempt to grant itself the power to make larger payments to shareholders is an aggressive move, said bankers as Fitch highlighted it would be a credit negative.