LatAm Bonds
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The €3bn 15 year deal from the European Union could be the last large euro benchmark of 2012, say SSA bankers struggling to find candidates willing to issue this side of Christmas. Those that still need cash are focused on the dollar market and those that don’t have little incentive to pre-fund.
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A sub-5% yield for Bolivia’s market return on Monday set the tone for a bumper week in Latin American bond markets, with the Chilean sovereign, Guatemala’s Banco Industrial and Brazilian debutante Caixa Econômica Federal also benefiting from strong demand for paper from the region.
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The Provinces of British Columbia and Ontario grabbed the opportunity to issue new benchmarks this week in a market gasping for Libor-plus SSA supply.
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Rentenbank capitalised on the feeding frenzy for high grade dollar assets paying Libor plus spreads and expectations that it would soon benefit from an explicit state guarantee to complete its benchmark programme for the year with a well oversubscribed seven year global bond.
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Sovereign, supranational and agency deals continue to price through borrowers’ secondary curves with well oversubscribed books in dollars and achieve heavy oversubscription. This is pushing bankers to encourage their clients to pre-fund for 2013. But the deal pipeline for the remainder of the year looks thin and only a few issuers are looking to get started early on next year’s funding tasks.