LatAm Bonds

Venezuelan oil giant PDVSA left bondholders clueless on Thursday evening as to whether it would make a $985m amortisation and interest payment on time on Friday, with some calling the chances of a large and ugly default no better than a coin toss, writes Oliver West.

Lat Am bond bankers expect at least two borrowers from the region to price new deals on Thursday, after a quiet couple of days in new issue markets.

Lender Banco Hipotecario, which was the first Argentine borrower in cross-border markets after Mauricio Macri’s presidential election win in November 2015, could also be the first to issue after the president’s successful showing in mid-terms last Sunday.

Argentine bonds and stocks rallied strongly on Monday after the ruling Cambiemos coalition bettered the predictions of already favourable opinion polls at Sunday’s mid-term elections.

Falabella, the Chilean retail company, raised $400m of new debt in a 5.5 times subscribed deal on Monday, as bond bankers say the party in Lat Am bond markets is set to continue.

As bondholders await some kind of communication on overdue coupon payments from Venezuela, PDVSA and Electricidad de Caracas, Standard & Poor's has said it is “uncertain” about oil company PDVSA’s ability to pay forthcoming bond maturities.

When market participants can’t see a possible end to a bond rally, the ending is likely to be brutal.

The Republic of Ecuador raised $2.5bn of 10 year notes on Wednesday to take its total borrowing for the year to $5.5bn as — for the first time in seven deals — the sovereign mandated an institution beyond Citi to manage the issuance.

Colombian lender Banco Davivienda sold $500m-equivalent of peso-denominated bonds in global markets on Thursday to kick off an expected flurry of global local currency deals from Latin American issuers.

Two Brazilian bond deals this week underlined the improved sentiment towards Latin America’s largest economy as Banco do Brasil’s first bond in three years traded a point up the day after pricing despite coming flat to fair value.

Uruguay is in advanced discussions with clearing houses to make it easier for international investors to participate in its local curve, as the sovereign looks to integrate its domestically issued notes with the nominal global peso curve established this year.

Sir Richard Branson spoke with GlobalCapital’s Lucien Chauvin on Wednesday, after meeting Caribbean heads of government and leaders of the World Bank and International Monetary Fund in Washington. Branson is pushing for a Marshall Plan to help the Caribbean cope with the relentless onslaught of hurricanes, exacerbated by climate change.