LatAm Bonds

Telefónica, the Spanish telecom company, fulfilled some bankers’ predictions today by launching a bond, taking advantage of the reopening of European corporate markets to peripheral issuers since last Thursday.

The Euromarket’s faded star faces a challenging return to funding next week. After a striking deterioration in its spreads since June, the European Financial Stability Facility (EFSF) will be seeking to finance a €3bn loan to Ireland — having lost no time in sending out RFPs on Thursday after Slovakia became the final eurozone member to approve its expansion.

Some Sfr250m of faintly exotic new issues from Corporación Andina de Fomento (a new 2.75% 2017 line) and Export-Import Bank of Korea (a tap of 2.375% 2015s) re-opened the Swiss franc SSA sector this week. But despite better sentiment, market conditions remain far from ideal for borrowers.

Pemex re-opened the emerging market bond sector on Wednesday after a three week drought with a well received $1.25bn 30 year tap. But continuing investor nervousness kept other Latin American issuers on the sidelines.

Supranational and agency issuers must look to pre-fund, if they can, as market conditions deteriorate, bankers said this week. This could lead to an unusually busy end to the year.

A dearth of issuance in the third quarter failed to dampen spirits in Latin American debt capital markets as leading desks reported record year-to-date headline numbers backed by profitable issuer liability management activity.

Soothing noises from European Union officials about a coordinated capital injection for banks, fresh liquidity measures from the European Central Bank and an extension of quantitative easing in the UK helped boost SSA market sentiment on Thursday.

In the article titled "Spain aims to be master of its own destiny" in the "Spain and the Capital Markets" supplement published in September, José María Capapé of Natixis was quoted as saying: "The key question now is not about reducing the deficit," which he did not say at any point. We apologise for the error and have corrected the online version.

The European Financial Stability Fund — the cornerstone of the rescue plan for the eurozone crisis — came under pressure again in the secondary market this week with its spreads widening by the day as ambiguity about its role and eventual issuance volume undermine its credibility.

BBVA is building a global liability management capability, with the intention to serve clients in all the regions where it is active, especially Europe, the US and Latin America.

Spooked bond buyers boycotted primary and secondary markets in Latin America again this week, bringing to a close the slowest three months for issuance from the region since the second quarter of 2009.

A shake-up in the pecking order of some European sovereign, supranational and agency issuers, combined with market volatility and poor deal performance has left a string of potential issuers on the sidelines and bankers asking where new issue business will come from in the fourth quarter.