LatAm Bonds

Brazil’s Odebrecht Oil & Gas has released initial price thoughts for its planned drillship securitization but with only non-deal roadshows to keep other DCM bankers busy it is unlikely to precede a wave of new issuance from LatAm, said bankers.

Caribbean hotel operator Playa Hotel & Resorts tapped its Caa1/B rated bonds well above par on Tuesday, showing that appealing to the US high yield community can outweigh EM investor scepticism for some borrowers.

Russian issuers have finally returned to the market this year, with both Sberbank and Russian Agricultural Bank printing dollar bonds this week. RAB's $500m deal is a tap of its outstanding $800m 2018s, while Sberbank's note is a $1bn 10 year non call five tier two bond, printed under the Central Bank of Russia’s clarified writedown language for Basel III compliant debt.

The average size of an emerging market bond in the first weeks of this year has leapt skywards compared to previous years while the number of deals priced has plummeted, according to Dealogic data. This may be a function of sovereigns having so far dominated the market — especially in CEEMEA — but is a trend that could be the shape of things to come for the rest of the year.

Peruvian lender Interbank will meet investors this week ahead of a potential senior unsecured bond as LatAm DCM as the market reaches the end of a period of blackout periods for issuers.

Year to Date Latin America DCM Bookrunner Ranking

A lack of issuers, not a lack of demand, is keeping Latin American debt capital market activity quiet as the region looks set for its second consecutive week without issuance.

Upgrades and positive outlooks flooded in for Mexican issuers this week after the sovereign’s upgrade to A3 from Moody’s on February 5, but EM bond investors are struggling to take advantage as they say paper from the region is scarce.

LatAm DCM bankers said top Argentine issuers could follow natural gas provider TGS in pushing out the maturity of old bonds rather than issuing new debt, as Argentine debt capital markets appear shut.

Two corporate upgrades added further momentum to excitement around Mexico on Monday as bankers continue to take stock of the Central American sovereign’s gaining an A rating.

Total EM volumes are only marginally down on last year to date, at $71.3bn, despite secondary trading levels having been rocked by an emerging markets sell off over the last fortnight. The total volume of new EM paper sold is only $36bn lower than at this point in 2013, according to Dealogic data.

LatAm DCM bankers are gearing up for another week of little or no supply after Friday’s mixed non-farm payroll data in the US did little for clarity in EM bond markets.