LatAm Bonds

Latin American credit markets enjoyed another positive week on the back of a slight rally in oil prices, but bankers said most issuers were not keen to take a chance and announce a deal until the stability extended further.

Not all emerging markets bond bankers may agree with the strategy — with certain deal-hungry New York dealers particularly vociferous in their opposition — but Latin American sovereigns are placing increasing faith in the euro market for their international funding, writes Oliver West.

Brazilian bonds rallied on Wednesday afternoon after the country's treasury secretary told local press that the sovereign was considering buying back foreign bonds in what DCM bankers said was likely to have been a deliberate response to a ratings cut from Moody’s in the morning.

Latin America sovereigns’ new found fancy for euro denominated bonds has sparked fierce words from syndicate bankers defending and questioning the trend.

Argentina's finance minister, Alfonso Prat-Gay’s announcement that the country would issue up to $15bn of bonds to pay holdout investors cooled enthusiasm for the sovereign’s existing debt on Tuesday.

Peru opened books on its second euro deal in four months on Tuesday, after announcing an investor call on Monday which caused its secondary curve to widen 20bp.

The good run in Latin American credit extended on Monday as the region’s bond markets finally gave off encouraging signs after more than a week of positive tone. But still no dollar new issues came.

The Republic of Peru could become the third Latin America sovereign to issue in euros in 2016 after holding an investor call at 10.30am UK time on Monday.

Negative rating actions on two of the region’s largest sovereigns did not dampen the mood in Latin American credit markets this week, even though bankers saw a good window for dollar issuance but no one to fill it.

Bond bankers expect European investors will have more Latin American sovereigns to occupy them in the future, after Mexico showed that very low yields are still on offer in euros for those issuers that choose not to hedge their currency exposure.

With a four hour presentation, and after two years of broken promises, Venezuelan president Nicolás Maduro finally announced economic reforms on Wednesday. But although bonds rallied slightly, analysts saw the measures as too little, too late.

Santander’s Chilean arm has launched a tender offer for up to $500m on its 3.875% fixed rate 2022s and its floating rate notes due 2018.