LatAm Bonds

There are 102 holders of non-restructured defaulted Argentine debt that are ready to demand a par repayment of their bonds based on the pari passu principle, taking advantage of the $1.6bn judgement in favour of hedge fund holdout creditors made in the US courts.

Fitch and S&P upgraded Mexican road concessionaire Red de Carreteras de Occidente’s (RCO) senior-secured peso-denominated notes by one notch to BBB and BBB+ respectively on Monday on the back of the issuer’s plans to lower its refinancing risk through a MP4.1bn ($302m) local market bond.

BBVA Bancomer’s subordinated tier two 15 year non-call 10 bond, which was priced on Thursday, provides a tight benchmark for Basel III issues as the market weighs up what should be an appropriate premium for the extra risk taken for purchasing the new securities, said bankers.

With one eye on a potential bout of volatility but pricing deals comfortably, the Latin America bond market continued to climb towards record yearly volumes this week with Mexico the centre of attention.

Bond prices in Venezuela took another tumble this week as rumours of economic adjustments were dashed and global oil prices continued to fall, cancelling out gains made last week in a relief rally following the $3.135bn maturity and interest payments made on PDVSA bonds.

A source close to Santander Chile said that the lender's “non-deal” roadshow will lead to a new issue in the coming days as the LatAm bond market maintains impetus.

Chilean investment bank LarrainVial has appointed Andrés Trivelli González as the new chief executive of its brokerage arm, LarrainVial Corredora de Bolsa, after the resignation of Manuel Bulnes Muzard. In September, Bulnes was one of eight LarrainVial employees fined a total of $164m by the Chilean regulator for alleged illegal share trades.

Mexican IT service provider Six Sigma Networks (Kio) sold a $500m seven year deal on Tuesday well inside price talk to show that the market is wide open for LatAm high yield despite rating agency warnings this week that the region’s sub-investment grade borrowers will be more affected than most by changing external conditions.

Growing expectations of a financial market friendly government by the end of next year and occasional indications that the finance ministry may negotiate with holdout creditors once the RUFO clause expires in January mean that many observers maintain a constructive view on Argentina despite another default on its restructured bonds.

Peru made its return to international bond markets after a two year absence on Thursday, selling a nuevo sol-denominated 10 year and a dollar-denominated 2050 as LatAm bond markets shrugged off Wednesday’s more hawkish than expected Fed guidance.

Government owned copper company Corporación Nacional del Cobre de Chile (Codelco) raised $980m of 30 year bonds on Tuesday in the fifth cross-border bond issuance from the country in five days as part of the government’s plan to modernise the company.

The mild market reaction to Dilma Rousseff’s Brazilian presidential election victory last Sunday suggested the incumbent’s triumph was already priced in, said bond investors. However, market participants warned of volatility in the coming months until the direction of the government’s economic policy becomes clearer.