Latin America

Argentina could not wish for better market conditions as it prepares its crucial first bond of 2017, said Lat Am bankers this week. After many sleepless nights for DCM bankers pitching the deal, the South American sovereign on Wednesday mandated bookrunners, writes Oliver West.

Brazilian state-owned oil company Petrobras cemented its popularity as an improving credit story with a hugely oversubscribed $4bn new issue that flew above par in secondary markets, triggering a great week for Lat Am new issues and reiterating the renewed optimism around Latin America’s largest economy.

Honduras’s first bond issue in more than three years capped a roaring week for Latin American primary markets, with seven borrowers raising more than $7.5bn between them, when the issue was priced with a negative new issue premium.

Investors saw Brazilian pulp and paper company Fibria Celulose’s new 10 year green bond pricing very tight to its existing curve, despite the company having to remove controversial covenant language after it proved unpopular with investors.

Four private sector corporates from Latin America sold dollar denominated bonds this week, although borrower-friendly market conditions were not enough to allow the issuers to get away with more aggressive covenant language.

Latin American issuers are leading the charge to primary markets this year so far in emerging market bonds but Wednesday saw the first CEEMEA issuer to open books as Israel tried a dual tranche 10 and 20 year trade.

The Republic of Ecuador’s thirst for new debt shows no sign of being quenched as the South American nation raised $1bn of bonds on Tuesday.

Both of Petrobras’ new benchmark bonds traded up more than a point the day after pricing as bankers said the level of demand for the deal would have allowed the company to print even more than the $4bn it managed on Monday.

Bond bankers were struggling to remember a time when a single-B credit had provided the first LatAm deal of the year, but Petrobras’ new issue succeeded in blowing the market wide open as borrowers line up to raise funding.

BRF, the Brazilian food conglomerate, has confirmed that it is considering London for an IPO of its halal food business, although a final decision has not been made.

Petrobras has opened books on the first non-Asian emerging markets bond of the year, and is marketing a four-tranche dollar bond.

Fast growing Argentine energy company Pampa Energía will begin investor meetings on Tuesday as it plans a much anticipated debut bond sale to refinance loans used to purchase Petrobras’ Argentine operations last year.