Latin America

Over 90% of Ecuador’s external bondholders agreed to a consent solicitation that expired at 5pm New York time on Friday, more than enough to allow the government to delay all coupon payments until August. A more comprehensive debt reprofiling will follow.

After making investors wait until the end of Friday's trading session that saw a strong bid for its bonds, Argentina finally proposed terms on its mammoth external debt restructuring. With early recovery rate estimates in the 30%-35% range, investors did not even wait until the weekend was over to express their discontent.

Bondholders are expected to fight a formal restructuring proposal from the Argentine government that should arrive on Friday and proposes heavy haircuts, say market participants. Argentina’s government appears ready to play hard ball.

Bond markets handsomely rewarded Peru on Thursday for leading the way in Latin America on economic policy reaction to the Covid-19 crisis, notching its lowest ever dollar funding costs. As Peru’s public treasury director said the deal was to increase already substantial liquidity buffers, Lat Am bankers were left hoping the result would encourage more reluctant issuers.

The chief financial officer of Banco Santander México told GlobalCapital that the lender had decided to get ahead of a possible surge in demand for credit by issuing the largest ever bond by a Mexican bank on Tuesday.

The CFO of Banco Santander Mexico told GlobalCapital that the lender had decided to get ahead of a possible surge in demand for credit by issuing the largest ever bond by a Mexican bank on Tuesday. But DCM and syndicate bankers worry that most Latin American issuers are not taking advantage of strong markets to shore up cash positions with the full impact of the Covid-19 crisis still unknown.

Banco Santander Mexico showed that emerging market investors are willing to deploy cash in a greater range of credits than just sovereigns as it sharply increased the size of a five-year senior deal on Tuesday. But though the new issue concession was in line with expectations, the deal underscored the new reality of funding conditions for Latin America borrowers.

Though Ecuador’s curve initially sold off on the sovereign’s request to push back debt payments until August, most analysts and investors expect the cash-squeezed country’s bondholders to offer the government flexibility in its time of need — mostly in an effort to avoid something far worse.

Banco Santander Mexico is hoping to become the first Latin American company to issue internationally in six weeks on Tuesday after speaking to investors on Monday about a potential senior unsecured trade.

With emerging markets across the globe facing an overwhelming liquidity squeeze, the IMF said on Thursday that it would “look for solutions that can unlock critical financing” in countries where the unsustainability of debt prevented the fund from lending, potentially increasing funding options for the most stressed of countries.

Argentina’s move to suspend domestic law bond payments for the rest of the year encouraged holders of its foreign law debt, some of who are beginning to spy value in the battered curve.

Though Ecuador was already late on debt payments and bondholders were already expecting to be asked to agree to delay coupons, the cash-squeezed sovereign’s bond curve sold off sharply after the government launched a consent solicitation to that end on Thursday afternoon.