LatAm Bonds

After “particularly ugly” second quarter results, according to one bank’s credit analyst, Moody’s confirmed on Monday that Mexican construction group Empresas ICA’s turnaround was short-lived by placing its B2 rating on negative outlook.

Credit Suisse has named Jorge Eduardo Díaz Barros as Chilean country head after hiring the banker from JP Morgan.

Syndicate bankers covering Latin America expect new issuance from the region to pick up from a low base in September but there is little expectation that the increase in activity will allow volumes to catch up with last year’s record numbers.

Warnings have emerged from several quarters that unprecedented corporate issuance from Latin American companies in the past five years could lead to severe stress in the sector as low GDP growth and tumbling commodity prices bite.

Defaults in Latin America’s corporate sector are at levels not seen for 10 years, said Fitch this week as credit analysts say more pain is on the way for the region’s companies as years of record levels of issuance catch up with the region.

Even the strongest companies are not safe. When Mexican state oil company Pemex — alongside the Mexican sovereign — was awarded an A3 rating in 2014 the talk in the market was of the country’s energy reform helping it to bridge the gap between emerging and developed markets.

Brazilian low-cost airline Gol Linhas Aereas Inteligentes became the latest high yield issuer from Latin America to be downgraded on Monday as recession in the region’s largest economy hit passenger demand.

WTI crude oil’s slide to below $40 last week sent Ecuador’s bonds plummeting as economists predicted more pain for the Andean nation.

The brutal sell-off that afflicted Brazilian bonds in July appears to have slowed somewhat amid the low trading volumes of August, though economic bad news and political troubles show no sign of abating.

Though this month has been one the quietest Augusts in the memory of many Latin America bankers, Peru was correct to anticipate US rate rises by issuing its first new dollar benchmark since 2010 on Tuesday, they said.

Project bond supply could be on the way from Colombia after Goldman Sachs committed to provide $1.2bn for the first leg of the financing of the country’s $25bn so-called 4G infrastructure programme.

Colombian oil company Pacific Rubiales’ decision to change its name may be a “milestone” for the company’s CEO but it means nothing to bondholders who appear ever more pessimistic that the issuer’s bonds will survive lower oil prices in tact.