Latin America

Monday’s official launch of Ecuador’s debt restructuring offer split the bond markets, with large creditors claiming that the sovereign had set an example to be followed while others dismissed its approach as “aggressive” and that it set a “harmful precedent”.

Mexican real estate investment trust Fibra Uno returned to the bond markets on Wednesday to price a postponed tap of its 2030 and 2050 notes.

Lat Am bond markets continued to demonstrate growing risk appetite as Brazilian petrochemical company Braskem began marketing hybrid bonds on Tuesday.

Ecuador’s market-friendly debt restructuring hit a bump in the road this week as bondholders put forward proposals that would include conditions around environmental, social and governance (ESG) factors.

The run of new bond issues from Latin America credits looks set to extend this week after the slew of corporates from the region to tap the market last week mostly emerged with a combination of slim new issue concessions and positive aftermarket performance.

After striking a remarkably swift restructuring deal with creditors, Ecuador’s government deserves praise. But it is unrealistic to expect such smooth discussions elsewhere, as emerging market sovereign defaults inevitably rise.

Latin America has been taking the spotlight in July after a record-breaking quarter for emerging markets bond issuance, but with US elections looming and all-in yields still very attractive, bankers across the emerging market world say there are plenty of reasons for issuers to continue to flock to markets.

Amid warnings about a looming debt crisis in emerging markets, bond investors this week hailed Ecuador as an example to follow in sovereign restructurings, while continuing their showdown with Argentina. Ecuador’s market-friendly philosophy appears to be paying dividends over Argentina’s more confrontational approach, but not every issuer is likely to follow its precedent, writes Oliver West.

Argentina’s largest bondholders on Wednesday evening dashed hopes that the government’s new improved restructuring offer would achieve mass take-up. But some investors took hope from the tone of the creditors’ statement.

El Salvador, the highest yielding Latin American sovereign not to have already announced a debt restructuring, sold $1bn of 32 year bonds on Wednesday but at a hefty concession to its inverted curve.

Two Colombian companies kept corporate issuance from Latin America ticking with aggressive deals on Wednesday even as bankers reported softer conditions in US investment grade bond markets

As private creditors continue to resist calls to participate in coordinated debt relief efforts, a group of Ecuador’s bondholders appeared to be insisting that another path was possible as they said the South American sovereign had set a positive precedent for other EM sovereign debt restructurings likely to follow in the Covid-19 era.