LatAm Bonds

Costa Rica paid a new issue premium of over 23bp for a 30 year bond on Thursday but bankers on and off the deal said it was not cheap by recent standards.

Two of Latin America’s best-rated credits showed there is strong appetite for the right names in spite of continued low new issue volumes from the region this week.

Emerging markets telecoms company Digicel will buy back $664m of its outstanding senior secured notes due 2017 after 83% of investors holding the notes agreed to tender their paper.

Mexico telecoms giant América Móvil reopened its global local peso bonds due 2024 for Mp3.5bn ($232m) on Wednesday as international investors demonstrated confidence in the currency.

Latin American sub-investment grade companies will face “difficult operating and market conditions” in 2015, said Fitch in a special report on leveraged finance in the region this week.

Investors were more positive on Wednesday that Petrobras is moving in the right direction despite a surprise downgrade last week, after its bond spreads tightened around 50bp on Tuesday.

Telecoms giant América Móvil is likely to tap reopen its existing títulos de crédito extranjero due 2024, according to Moody’s. The company completed investor meetings discussing a potential peso-denominated issue on Friday and could issue as soon as this week, according to bankers close to the trade.

Fitch downgraded Colombia’s largest private oil company Pacific Rubiales by one notch to BB and placed the rating on negative outlook on Monday. Prices in the company's bonds fell but bond traders said movement was minimal.

A positive aftermarket performance for the first Latin American high yield bond of 2015 has not convinced all bankers that the market is wide open for sub-investment grade borrowers from the region.

Latin American DCM bankers expect more issuers from the region to follow in Mexico and Cemex across the Atlantic to take advantage of ample liquidity and low rates provided by the European Central Bank’s quantitative easing programme.

A new issue premium of around 20bp looked hefty for investment grade sovereign borrower Uruguay this week.

Cemex is on track to issue the first high yield corporate bond from Mexico this year and has returned to the market with a dual tranche euro and dollar offering.