Latin America

Two of Latin America’s most established borrowers, the Colombian sovereign and Brazilian bank Itaú, returned to international bond markets on Tuesday. Though both issues were priced roughly as expected, bankers on and away from the trades said there were signs that Lat Am’s roaring start to 2021 was losing steam.

Holders of bonds issued by Argentine state oil and gas company YPF are seeking to form a creditor committee to block a proposed distressed debt exchange that analysts say is unlikely to gain much traction with creditors.

Mexican firm Nueva Elektra del Milenio sold $500m of seven-year senior secured bonds on Tuesday, benefiting from a structure that granted it an investment grade rating.

The Association of Brazil’s Indigenous Peoples has written an open letter to BlackRock’s CEO Larry Fink, who is expected to publish his annual letter to stakeholders this week. Apib wants BlackRock to end what it calls its “complicity” in the destruction of the Amazon rainforest, and to consult indigenous people as it finalises its new policy on biodiversity and deforestation.

Six of the 11 Latin American borrowers to have priced or announced new cross-border bonds so far in 2021 have opted to show off their ESG credentials while doing so — either through dedicating the use of proceeds or by issuing in the more novel sustainability-linked format. Brazil is leading the way, with three further mandates on Monday.

Mexican lender Crédito Real on Monday became the first Latin American non-bank financial institution (NBFI) to tap international bond markets since the coronavirus pandemic began as it raised $500m of seven year debt.

Chilean mobile phone operator WOM began investor calls on Monday ahead of a proposed bond issue of up to $450m.

Argentine oil and gas company YPF has launched an exchange offer for all of its $6.228bn of outstanding international bonds, taking advantage of a new central bank rule that enables companies to issue bonds guaranteed by export receivables. The proposed exchange bonds would not pay interest until 2023, and Fitch said the deal qualifies as a distressed exchange under its criteria — even though investors will end up owning more bonds than they started with.

Latin America’s largest e-commerce company MercadoLibre and Mexican cement maker Cemex kept up the hectic conditions in the LatAm primary bond market on Thursday, with the huge order book on MercadoLibre’s inaugural bond issue the clearest indication of risk appetite among EM buyers.

Emerging markets issuers of all flavours ignored convention and stormed into primary bond markets this week, with great success. Renewed warnings about increasing debt ratios in emerging nations were no match for an extraordinarily supportive technical picture as investors piled into deals — even as Democratic victories in US Senate run-offs pushed rates higher. Mariam Meskin and Oliver West report.

Mexican non-bank lender Crédito Real began investor calls on Wednesday as it looks to take advantage of highly liquid bond markets to partially refinance a bond maturing in 2023, and simultaneously align the covenant packages on all of its senior unsecured bonds.

Latin American DCM bankers hailed Brazilian paper company Klabin’s first sustainability-linked bond (SLB) as an encouraging sign for the ESG debt market in the region, as a huge order book allowed the issuer to tighten by 55bp from initial price thoughts and land well inside its curve.