Latin America

Mexican petrochemicals company Grupo Idesa is giving bondholders more time to participate in a distressed debt exchange, saying that the “current environment” had hindered the ability of the bonds’ "custodians" to tender.

Rating agencies have continued their policy of taking swift action on Latin American governments as Standard & Poor’s removed its positive outlook from Brazil, the region’s largest economy, citing political opposition to President Jair Bolsonaro as a key reason.

For now, at least, Argentina appears to be asking its domestic bondholders to take the brunt of the government’s efforts to ease cashflow worries amid the Covid-19 crisis, providing upward momentum to foreign law debt prices.

As investors single out Mexico’s response to Covid-19 as one of the least convincing in Latin America, Fitch threw government-owned oil company Pemex and its $80bn of bonds deeper into sub-investment grade territory on Friday.

Owners of Ecuador debt are expecting the country’s legal system to rule on whether Rafael Correa, former president and one-time bond market foe, can participate in next year’s elections. As they plan for the South American nation’s expected restructuring, some analysts spy upside to latest secondary prices.

EM bond bankers were feeling relieved after a better day for global markets on Thursday, as they said some of the asset class’s best issuers were lining up deals hoping to clinch much-needed funding.

As the initial government-imposed deadline for Argentina’s mammoth debt restructuring sailed by without a concrete offer to creditors having been put on the table, some analysts are worried that a hard default may be inevitable.

Bond market participants in Latin America are gradually accepting that Zoom video calls will become a permanent feature of their job. However, in this particularly travel-intensive segment of capital markets, when it comes to selling a product, neither issuers nor bankers appear willing to cut down visits to clients in a region where personal trust is arguably more important than anywhere else.

Two major rating agencies now have Colombia on the lowest rung of the investment grade ladder with a negative outlook after Fitch took action on the sovereign. Cries from former finance ministers that it was an inappropriate time for downgrades fell on deaf ears.

Emerging market bonds are trying to catch the same bid that has gripped investment grade markets, particularly in the US. Now, Latin America borrowers are scavenging once more for chances to print new issues.

Latin American corporates from across the rating spectrum are taking a range of measures to protect their liquidity in the face of the Covid-19 slowdown, but analysts suggest several defaults are inevitable as the region is hit on several fronts.

Mexico petrochemicals company Grupo Idesa on Monday issued a supplement to the offering memorandum on a distressed bond swap as it attempts to avoid default by persuading bondholders to push out the maturity on a $300m bond due in December.