LatAm Bonds

Argentina’s state-owned oil company YPF will reduce the average maturity of its debt in return for reducing its interest burden after almost all the holders of its 2028 notes agreed to swap into the borrower’s 2018s sold in December 2013.

State-owned oil company YPF’s blowout bond issuance this week is a promising sign for other Argentine issuers in a country in critical need of dollars. But the list of those that potentially have market access is short, warn investors, despite a rally in Argentine debt in the past week.

Latin American bond bankers said the blow-out 10 year issue printed by meatpacker JBS on Monday showed several Brazilian issuers were more comfortable with issuing conditions since the sovereign's downgrade by Standard & Poor's last week.

Huge oversubscriptions for borrowers ranked from single A to triple C helped LatAm to its second busiest week of bond supply all year, before any potential deals on Friday. LatAm investors had been starved of new deals in February and saw patchy new issue activity in March.

Bond investors showed no sign of losing faith in Mexico’s reform programme as the sovereign attracted 413 investors to Tuesday’s €2bn dual tranche bond issue — more than the country has had in any international bond before.

Digicel, the Caribbean telecoms company, will buy back over 70% of its 2018 bonds as part of a liability management exercise to be funded by last month’s bond issue. The company was aiming to redeem all the 2018s.

Mired in a sovereign debt court case, Argentina has not been well known for its ability to maintain good relationships with the capital markets in the past decade. But investors praised state-owned oil company YPF’s way of befriending investors after its third international bond in just over six months showed that its borrowing costs were plummeting.

Emerging market bond issuance is booming, with states and companies launching dual tranche deals in dollars and euros. Some $9bn has already been priced this week, and there is more in the pipeline.

Latin American borrowers are rushing to the bond market to take advantage of strong new issue conditions. Four deals were printed on Tuesday. Bankers say there is no sign of indigestion yet as several companies line up potential debuts.

Bond investors showed no sign of losing faith in Mexico’s reform programme as the sovereign attracted 413 investors to Tuesday’s €2bn dual tranche bond issue - more than Mexico had had in any international bond before.

Latin American bond bankers said the blowout 10 year issue printed by meatpacker JBS on Monday showed several Brazilian issuers were more comfortable with issuing conditions since the sovereign's downgrade by Standard & Poor's last week.

The United Mexican States launched seven and 15 year euro bonds on Tuesday and received almost €7bn of orders.