LatAm Bonds

LatAm syndicate bankers say they believe this week’s three deals from financial issuers are a sign of more supply to come from the sector as Brazil’s Banco Daycoval received such strong demand that it printed $500m on Wednesday having originally intended to sell a bond of less than benchmark size.

In May 2013, the bond market was in the last throes of its buy anything and everything mode as Petrobras sold the largest ever EM bond at $11bn. Petrobras has now returned with an $8.5bn sale.

Crédito Real underlined the strong market conditions Latin American borrowers are enjoying in March after a barren February, wasting no time in tapping a bond it issued less than a week ago.

Printing $8.5bn, Petrobras did not break EM issuance records this year, and the state-owned Brazilian oil company paid a larger new issue premium than it is used to. But LatAm bond bankers said that the hefty amount the company raised towards its big investment programme was success enough given the negative sentiment surrounding Brazil.

Mexico’s newly acquired single-A status helped it to hit unchartered territory for EM issuers this week when it sold a £1bn century sterling denominated bond in a deal driven by demand from UK-based investors, writes Oliver West.

LatAm syndicate bankers say they believe this week’s three deals from financial issuers is a sign of more supply to come from the sector as Brazil’s Banco Daycoval received such strong demand that it printed $500m having originally been intending to sell a below benchmark size deal.

Attractive pricing, a core group of interested investors and a desire to carry out a transaction to consolidate Mexico’s strength as a new A-rated issuer drove the sovereign to go for an ambitious 100 year sterling bond, the country’s director public credit told GlobalCapital.

Mexico surprised the market with a 100 year sterling transaction on Wednesday morning, becoming only the second borrower ever to launch such a long dated bond in that currency. However, a rival banker deemed the deal an ‘ego trade’, and felt the issuer was paying up for both the choice of currency and tenor.

Latin America bolstered meagre emerging market issuance this week, ignoring persistent fears about fallout from Ukraine. Petrobras pulled off an impressive $8.5bn six tranche bond and Mexico is in the market with a rare 100 year sterling deal. But Sunday's planned referendum on Crimea joining Russia is weighing on risk appetite, and could quash any potential pipeline.

Mexican microfinance company Crédito Real will buy back at least $180.7m of its $210m of outstanding bonds due 2015 after bondholders owning 86.06% of the notes tendered their debt.

Peru’s fourth largest bank Interbank was able to tighten pricing on its new 15 year subordinated bond as investors piled in to allow the borrower to print $300m of fixed to floating rate tier two notes.

As expected, Petrobras offered higher spreads and all-in yields for its latest jumbo dollar issue than its $11bn record-breaker sold in May 2013, near the peak of the EM debt market.