LatAm Bonds

Remarkable resilience in the face of an uncertain future was the tale of emerging market bond prices on Wednesday as Donald Trump won the presidential election in the US, much to the surprise of EM traders themselves, who expected the risk aversion to last much longer. But the outlook for EM bonds under a Trump presidency is far from rosy. Latin America has been the clear underperformer so far but more pain is expected.

The failure of El Salvador’s legislative assembly to approve the issuance of long-term debt has heightened the Central American nation’s liquidity risks to critical levels, with Moody’s slamming the sovereign with a double notch downgrade on Monday.

The largest financial services company in Honduras, Inversiones Atlántida, has begun meeting fixed income investors ahead of a potential debut dollar bond.

Emerging markets borrowers may be well funded but they are still not prepared for a Donald Trump victory in the US presidential election next week. While borrowers have completed the majority of their funding for the year, the market is positioned for a Clinton victory, and should she lose, a big sell-off is expected to ensue, particularly in Latin America, as investors look for safe haven assets.

Argentinian debut international issuer Compania General de Combustibles (CGC) raised $300m on Wednesday, and while it offered a large pick-up over the sovereign, rival bankers were impressed that investor demand has extended to lesser known names in the region.

Banco Macro printed the largest Basel III compliant tier two bond from Argentina on Tuesday, slipping into the market with a yield palatable enough to attract a $900m book, even as investors begin to lower the amount of risk they are exposed to before year-end.

Colombia’s Pacific Exploration & Production announced on Tuesday that all conditions had been met on a corporate restructuring plan that will allow the oil company to leave creditor protection.

Colombia window manufacturer Tecnoglass began meeting bond buyers on Tuesday ahead of a potential dollar market debut.

Colombia’s second largest lender, Banco de Bogotá, was able to tighten pricing on the tap of its existing tier two bonds by 30bp on October 28 as bankers said the issuer had attempted to generate strong demand with very generous initial price thoughts.

Eastern Argentine province Entre Ríos looks set to continue the run of Argentine provinces tapping international bond markets after announcing a roadshow beginning October 31.

Venezuelan state oil giant PDVSA finally wrapped up an exchange of bonds due 2017 for longer dated paper last Friday, but analysts said that the effect on the company’s credit quality in the medium term was negligible or even negative.

Choppy market conditions on Wednesday and Thursday did not prevent Trinidad Generation Unlimited (TGU) from pricing its debut dollar bond issue after notching a four times oversubscribed book.