LatAm Bonds

Amid warnings about a looming debt crisis in emerging markets, bond investors this week hailed Ecuador as an example to follow in sovereign restructurings, while continuing their showdown with Argentina. Ecuador’s market-friendly philosophy appears to be paying dividends over Argentina’s more confrontational approach, but not every issuer is likely to follow its precedent, writes Oliver West.

Argentina’s largest bondholders on Wednesday evening dashed hopes that the government’s new improved restructuring offer would achieve mass take-up. But some investors took hope from the tone of the creditors’ statement.

El Salvador, the highest yielding Latin American sovereign not to have already announced a debt restructuring, sold $1bn of 32 year bonds on Wednesday but at a hefty concession to its inverted curve.

Two Colombian companies kept corporate issuance from Latin America ticking with aggressive deals on Wednesday even as bankers reported softer conditions in US investment grade bond markets

As private creditors continue to resist calls to participate in coordinated debt relief efforts, a group of Ecuador’s bondholders appeared to be insisting that another path was possible as they said the South American sovereign had set a positive precedent for other EM sovereign debt restructurings likely to follow in the Covid-19 era.

Chilean non-bank financial institution Tanner is joining the slew of Latin American companies turning to bond markets as it holds investor calls ahead of a proposed five year amortising note.

Argentine bonds rallied on Monday after the government surpassed expectations with a new debt restructuring offer. But markets are still waiting on the reaction of the largest bondholders, as Argentina had abandoned negotiations ahead of its updated offer.

While Argentina’s back-and-forth attitude to debt negotiations means it still has not reached a deal more than three months after the deadline it had set itself to wrap up the process, Ecuador’s decision to keep investor relations as cordial as possible could see it rewarded with a remarkably swift restructuring of its bonds.

Brazilian mining giant Vale returned to bond markets after a three year absence on Monday with a 10 year bond that bankers said left investors hungry for more.

Mexican lender Banorte and Colombia’s second largest telecoms company began investor calls on Monday as Latin American borrowers look for funding in the wake of a rally that reawakened issuer interest in bond markets.

Central American sovereign El Salvador will this week show just how far risk appetite has rebounded in emerging markets as it seeks a long-dated benchmark bond even as an inverted bond curve suggests markets are pricing a high level of stress.

After a rush of dollar issuance from Latin American sovereigns, Uruguay — the last of the region’s investment grade countries to turn to bond markets during the coronavirus pandemic — spotted the chance in late June to become the first EM sovereign to issue abroad in its own currency this year. Herman Kamil, director of the country's debt management office (DMO), tells GlobalCapital how the sovereign bucked the trend.