LatAm Bonds

A smattering of issues this week showed it is possible for covered bond issuers to price publicly syndicated deals at the height of summer. Activity is more pedestrian in other FIG markets as Europe’s lenders continue to report second quarter results, with many posting more satisfying numbers than this time last year.

Senior SSA bankers have given up trying to pitch borrowers for deals this summer. Recent trades have convinced issuers and bankers alike that their time will be better spent at the beach this month but that could well lead to problems come the autumn rush, said bankers.

A methodology announcement by Moody’s last week highlights the paradoxical nature of the burgeoning corporate hybrid capital market, and its potential fragility. The agency’s stance could increase the risk of a company falling off a ratings cliff, just at the moment when it loses investment grade ratings.

A flurry of four deals reignited Latin American new issue activity as a total of $2.1bn of LatAm bonds were printed on Monday in the fifth biggest August day of issuance ever in the region, according to data from Dealogic.

Government-owned Banco de Costa Rica (BCR) sold its debut international bond on Monday in a snappy trade that opened and priced before lunchtime, offering a yield of 5.25% for $500m of five year senior unsecured notes.

Chilean corporates Colbun and Telefónica Móviles Chile are meeting investors this week, hoping to build on momentum for Chilean issuers started by compatriot Transelec’s first bond for 12 years two weeks ago.

Banco de Costa Rica (BCR) is looking to price its debut cross-border bond this week after completing a roadshow with Barclays and Deutsche Bank on Friday.

Banco Santander Chile expects to sell a second covered bond before the end of this year after its inaugural issue last week – the first from the country – beat its own expectations, the bank’s financial manager, Emiliano Muratore, has told EuroWeek.

Caribbean hotel operator Playa Hotels & Resorts has surprised bankers and investors by announcing a planned $300m Caa1/B2 rated bond as part of an LBO financing (see box).

Dealogic league tables of loans transactions, August 1, 2013.

Mexico intends to follow upon its recent triple-tranche Samurai bond with further appearances in the yen market and will attempt to take advantage of Japanese hunger for yield by further extending its curve in the currency.

UBS announced on Tuesday that it intended to buy back the special purpose vehicle set up by the Swiss National Bank in 2008 to manage the bank’s toxic assets in the fallout of the Lehman Brothers collapse. The bank made the announcement along with the posting of its second quarter results, which saw profitability gains hindered by litigation and impairment charges.