Latin America

Investor hopes that the US Office of Foreign Assets Control (OFAC) would retract a ban on US persons buying PDVSA debt were dashed on Friday, when the department made the situation worse for bondholders by adding Venezuelan sovereign bonds to the trading ban.

Brazilian pulp and paper producer Suzano and Chilean copper producer Codelco got Latin American bond markets going this week with smooth dollar deals.

Brazilian lender BTG Pactual will hit the road next week as it looks to capitalise on improving investor sentiment around Brazil, in order to issue a 10 year non-call five Basel III compliant tier two note.

Latin America bond investors cheered moves from the US government to up the pressure on Venezuelan president Nicolás Maduro to leave office this week, but a side-effect of sanctions left PDVSA creditors trapped, to the confusion of many. Oliver West reports.

Bonds from two of the most important issuers in Latin America sank this week as they neared fallen angel status, but some investors said that there was a danger of overshooting.

Ricardo Martínez, Ecuador’s finance minister, insisted a bond the sovereign issued on Monday was necessary, despite credit analysts saying the country cannot sustain issuing at high rates.

Pacific Gas & Electric has gone bankrupt with $52bn of debt, blaming forest fires that seared California during 2018. Vale, with $11bn, has been downgraded to the bottom edge of investment grade after its horrific dam burst last Friday.

Following confusion over the effect US sanctions against Venezuelan state oil company PDVSA could have on US bondholders, the final picture is growing clearer and the unfurling scene is not a pretty one.

Despite some investors saying it had been clear for some time that Pemex was on a gradual decline towards junk status, a two notch rating downgrade from Fitch appeared to catch bondholders unaware as the Mexican state oil giant’s debt slumped in secondary markets.

A fresh round of US sanctions on Venezuela’s government can only squeeze President Maduro further, said bond investors, but meanwhile there was some confusion on Tuesday regarding the apparent ban on secondary market trading of PDVSA debt by US persons.

A fresh round of US sanctions on Venezuela’s government will add to the pressure on 46th president of Venezuela Nicolas Maduro to clear off, said bond investors.

Brazilian pulp and paper producer Suzano returned to bond markets for the third time in five months on Tuesday, tapping its 2029s for a further $750m.