Latin America

Argentina’s nearing return to international bond markets after more than 15 years away could drive the Province of Buenos Aires to get its bond funding out the way as soon as possible to avoid clashing with the up to $15bn of sovereign supply in the pipeline.

Standard & Poor’s downgraded Costa Rica from BB to BB- on Friday, keeping the sovereign’s rating on negative outlook as the Central American country’s public finances come under pressure.

Hypermarcas, the Brazilian pharmaceutical company, will not extend the early bird deadline on the tender offer for its 6.5% senior notes due 2021 after bondholders responded positively to the buy-back offer.

Lat Am bond bankers said the seven banks understood to have led Argentina’s repo trade in December were the strongest candidates to lead the sovereign’s seemingly imminent re-entry into international capital markets.

Not all emerging markets bond bankers may agree with the strategy — with certain deal-hungry New York dealers particularly vociferous in their opposition — but Latin American sovereigns are placing increasing faith in the euro market for their international funding, writes Oliver West.

Brazilian bonds rallied on Wednesday afternoon after the country's treasury secretary told local press that the sovereign was considering buying back foreign bonds in what DCM bankers said was likely to have been a deliberate response to a ratings cut from Moody’s in the morning.

Latin America sovereigns’ new found fancy for euro denominated bonds has sparked fierce words from syndicate bankers defending and questioning the trend.

Argentina's finance minister, Alfonso Prat-Gay’s announcement that the country would issue up to $15bn of bonds to pay holdout investors cooled enthusiasm for the sovereign’s existing debt on Tuesday.

Peru opened books on its second euro deal in four months on Tuesday, after announcing an investor call on Monday which caused its secondary curve to widen 20bp.

Bolsa Mexicana de Valores, the only exchange in Mexico and the second largest in Latin America, expects growth in derivatives revenues and has retained bullish ratings from bank analysts as a result.

The Republic of Peru could become the third Latin America sovereign to issue in euros in 2016 after holding an investor call at 10.30am UK time on Monday.

Bond bankers expect European investors will have more Latin American sovereigns to occupy them in the future, after Mexico showed that very low yields are still on offer in euros for those issuers that choose not to hedge their currency exposure.