LatAm Bonds

A US Treasury sell-off on Tuesday had bond investors fretting over base rates and the chances of a corresponding effect on Latin America debt prices.

Investors appear to have given up hoping anything but a rising oil price can improve the credit profile of Venezuelan bonds.

Investors wondered if Colombia could increase its external debt issuance as a result of lower than anticipated oil prices after the sovereign registered a $6bn shelf with the Securities and Exchange Commission last week.

Latin American debt bankers are preparing for another quiet week of new issue activity as holidays will make global bond sales difficult even if market conditions stabilise.

Impressively tight pricing for a triple-C credit and an adjustment to the terms of the bond made it clear that investors this week buying the City of Buenos Aires’ international bond issue are betting on a change to a more market-friendly government in Argentina.

Argentine quasi-sovereigns are continuing to benefit from investor hopes for a settlement between holdout creditors and the government by issuing cross-border bonds — and are helping to alleviate the country’s dollar shortage in the process.

Buenos Aires City has got its bond issue away despite the poor state of the Latin American high yield market.

BBVA has promoted José Ramón Vizmanos to head of corporate and investment banking for South America.

Conditions for Latin American high yield bond issuers remain tough, say bankers, though such borrowers remain the majority of LatAm issuers known to be approaching the market soon.

Peruvian conglomerate Intercorp Perú will buy back some $238.175m of its outstanding 8.625% notes after 95.27% of investors holding the $250m notes agreed to tender their paper before the deadline of 4pm London time on Tuesday.

Standard & Poor’s believes there is at least a one-in-two chance of Venezuela defaulting on its debt in the next two years as it downgraded the South American sovereign to CCC and kept the outlook on negative.

The City of Buenos Aires, which is set to complete investor meetings on Tuesday, is planning to issue six year senior unsecured notes of around $500m, according to rating agencies.