LatAm Bonds
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High grade Latin American credits continued to find strong support this week with six deals pricing, including the Peruvian sovereign’s first Eurobond outing for more than a year and a trio of issues from debut names.
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Ireland began to repair its capital markets standing this week with a canny debt exchange that cut as much as €3.5bn from the looming maturity it was facing in two years’ time, while buying it more than a year.
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Norwegian krone new issues are finally slowing as the Eurozone crisis, originally a key driver of the market’s explosive growth last year, saps retail buyers’ appetite for dominant sovereign, supranational and agency borrowers.
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Four debut issuers joined the LatAm pipeline this week including the year’s first high yield candidate, encouraged by a stronger global market tone and surging investor demand for the region.
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Three of Latin America’s best-known names kept debt bankers busy this week, with deals that included an $800m transaction from Grupo Bimbo that was more than seven times covered.
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The gulf between the perceived worthiness of credits in North America and Europe is the widest ever seen, according to a survey by the International Association of Credit Portfolio Managers.
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Senior DCM bankers are predicting a strong first half for Latin American primary bond markets following record issuance in the opening week of 2012. Investors will look again at high yield deals, interregional deals will become ever more important and international demand for local currency debt — hit by last year’s FX sell-off — could also again become a big theme this year.
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New issue premiums mirrored last week’s elevated levels in the Latin American FIG and sovereign bond sectors this week as investors demanded substantial concessions from Colombia and BBVA Banco Continental.
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A crucial test of appetite for the European Union’s credit — a 30 year bond issue that the borrower has been trying to bring to the market since late last year — was this week passed with flying colours. The deal attracted a book of over €5bn, allowing the issuer to print €3bn.
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The Asian Development Bank opened this week’s dollar business with a knock-out $3bn five year transaction that Network Rail was able to follow with its own impressive deal, suggesting a strong bid exists for highly-rated SSA names free of association with the European crisis.
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Freddie Mac took the dollar market by storm on Thursday with a runaway 10 year success, highlighting the massive shortage of supply at the long end. It is the first 10 year GSE trade since Freddie Mac issued back in March 2009.