LatAm Bonds

Two more Latin America sovereigns could issue bonds soon as borrowers from the region make the most of improved market conditions.

Argentine state oil company YPF sold $1bn of five year notes at a new issue premium close to flat on Friday as the threat of an imminent flood of supply from Argentina did nothing to quell demand.

Real estate company IRSA CP this week became the latest Argentine issuer to raise debt in the international markets as bankers continue to work behind the scenes on the sovereign’s forthcoming return to markets.

Latin American borrowers are flocking to European bond markets like never before with Mexican beverage group Femsa and the Republic of Colombia the latest to join the trend this week.

The timing of Brazil’s return to bond markets last week was looking better by the day this week as the controversy surrounding the appointment and then suspension of former president Luiz Inácio Lula da Silva to Dilma Rousseff’s cabinet brought volatility back to the curve.

Latin American euro denominated issuance looks here to stay, no matter the arguments made against it by US bankers, after Colombia sold its first bond in the single currency since 2001 on Wednesday.

Another blow to credibility in Brazil sent the sovereign’s bonds tumbling on Tuesday after former president, Luiz Inacio Lula da Silva looked set to accept a ministerial position in Brazil’s government just a week after prosecutors requested his arrest as part of a corruption investigation.

Beverage company Femsa became the third Mexican company in a week to sell euro denominated bonds on Monday, jumping on an ECB-driven rally in credit markets to sell €1bn of seven year paper.

Brazil’s emphatic return to international bond markets on Thursday was likely designed to encourage its non-sovereign issuers to the market, said Lat Am bond bankers, although some questioned whether these deals would materialise.

Votorantim Cimentos, the cement making arm of Brazilian conglomerate Votorantim SA, will buy back just €120m of its euro denominated bonds after most bondholders rejected the terms of a proposed tender offer. The company was hoping to buy back €350m.

Latin America high yield bonds demonstrated their similarities with London buses on Wednesday as the Province of Buenos Aires and a Mexican cement company issued the first high yield bonds from Latin America since January 28 in the same week.

So remarkable has been the turnaround in sentiment in Latin American credit markets that bankers and investors could scarcely believe it was real, with as many borrowers issuing in four days this week as have done all year.