LatAm Bonds

Argentine sovereign bonds hit highs for the year on Monday after the US court-appointed mediator in the holdout dispute said that the country’s secretary of finance and vice-chief of cabinet would return to New York to negotiate with bond investors in the second week of January.

Movements in Pacific Exploration & Production’s share price left investors confused after the company announced it had brought in Lazard as a financial advisor and was seeking covenant relief on its loans.

Bad news seems determined to afflict Brazil until the very end of the year as Joaquim Levy’s resignation on Friday sent bonds to new lows with much of the market in holiday mode.

For most observes it had already become a matter of time. Standard & Poor’s had already made Brazil a sub-investment grade borrower and both Fitch and Moody’s had Latin America’s largest sovereign on review for downgrade.

Latin American DCM bankers say that January will bring a pick-up in new issue supply after a torrid second half of the year, but a positive reaction to Wednesday’s US interest rate hike has done little to adjust expectations for the coming year.

MTN investors are speculating that the huge yield available on Argentine peso bonds may be worth the risk of buying bonds denominated in a currency which is undergoing official devaluation.

For Latin American bonds, the US Federal Reserve’s decision to finally raise interest rates could not have provoked a more contrasting reaction than when it gave the first indication it was looking at tightening monetary policy back in May 2013.

MTN investors are speculating that the huge yield on Argentine peso bonds may be worth the risk.

It took Ecuador until the Age of Twitter to make a principal payment on international bond debt. But although the collapse of oil prices did not prevent the country successfully paying back its December 2015s at maturity, Ecuador faces an even tougher year in 2016 than it experienced in 2015.

Argentine energy company Medanito will wait until January to attempt its debut international bond issuance.

A rally in US Treasuries could not save Latin American bond prices on Friday as oil prices hit lows not seen in nearly seven years, making for the worst day of an already torrid week in the region’s credit markets.

Brazilian sugar and ethanol producer Tonon Bioenergia has filed for bankruptcy after many months of battling low prices, and Standard & Poor’s is pessimistic on bondholders’ recovery chances.