LatAm Bonds
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A strong debut dollar deal from Peruvian drinks firm Lindley Corporacion and a trio of roadshow announcements from quasi-sovereign names showed that the Latin American bond market was able to fend off the unease in Europe this week.
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In the eyes of some bankers, the $3bn five year transaction this week for the International Finance Corporation (IFC) was the perfect antidote to the current market turmoil. What was undeniable was that it provided the only bright spot on the sovereign, supranational and agency landscape, which remains mired in the ever-deteriorating situation in Europe.
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The European Financial Stability Facility (EFSF) is poised to add the flexibility of short term money market issuance to its arsenal in December after it limped across the line with a €3bn 10 year bond for Ireland on Monday. As Italian bond yields took another pasting, the EFSF admitted its plan to use leverage to provide guarantees on sovereign debt a less potent weapon than it had envisaged.
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LatAm borrowers shrugged off growing unease in Europe over the past week as a trio of much-anticipated defensive deals drew substantial demand. Meanwhile, Peru’s Intercorp became the first high yield corporate to access the market in more than two months.
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Despite Thursday’s relief rally and some prospect of a positive auction on Monday, SSA bankers and borrowers are reiterating calls for the ECB to rescue Italy after a week when the G8 sovereign neared an almost unprecedented loss of market access and the EFSF bail-out vehicle struggled to get even €3bn of bonds away.
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Vallourec, the French steel pipe maker, will hold a roadshow to meet bond investors from November 16. Standard & Poor’s today assigned a new rating to the company, at BBB+.
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Europe might have stepped back from the brink for the second time in as many weeks, after Greek prime minister George Papandreou abandoned his plan to hold a referendum on his country’s eurozone membership, but Europe’s rescue fund remains locked out of the long term international bond markets.
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State-owned Jamaican road company NROCC made its global market debut on Thursday with a $294m deal designed to refinance an outstanding short-term issue.
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Colombian electricity supplier Empresa de Energia de Bogota (EEB) rounded off a busy Thursday in the Latin American bond markets with a $610m 10 year refinancing. Whispers on yield started at the low to mid 6% level and were refined to official guidance of 6.125%-6.250%.