Mexico

The Inter-American Development Bank (IADB) said on Wednesday that it would mobilise $1bn of resources to support Latin American and Caribbean countries in their efforts to acquire and distribute Covid-19 vaccines, as analysts warn most of the economic benefits from vaccinations may only reach Latin America in the second half of 2021.

Standard & Poor’s cut Braskem Idesa’s credit rating from B+ to B on Friday, placing the rating on negative watch as the Mexican government’s termination of a gas transportation contract disrupted the polyethylene producer’s operations. The rating agency warned the company needs to address its gas supply shortage urgently, but some credit analysts eye a buying opportunity.

Mexico carried out its largest ever liability management exercise this week, refinancing more than $6.6bn of dollar bonds with new longer dated debt. But deputy finance minister Gabriel Yorio says that the sovereign will remain very active in international bond markets in the short term and is likely to be back in dollars early next year.

Mexican power generator FEL Energy, which sells 70% of its capacity to state-owned electric utility CFE, priced a debut bond deal on Wednesday as investors were unshaken by noise surrounding a different Mexican credit with a long-term agreement with a government-owned entity.

Mexico will hold a virtual non-deal roadshow with Japanese investors next week, according to Gabriel Yorio, Mexico’s deputy finance minister.

Latin America DCM bankers’ promises that a sovereign would jump on recent market positivity materialised on Monday as Mexico turned to international bond funding for the fifth time this year with a heavily oversubscribed liability management exercise that totalled $6.625bn, once switch-tenders were included.

Mexican power generator FEL Energy is the most recent Latin American credit to announce bond issuance plans but bankers covering the region expect several drive-by trades this week before the US Thanksgiving holiday cuts the window short next week.

Latin American bond bankers said that Mexican telecoms company Total Play Comunicaciones’ debut bond issue on Monday — the second Mexican high yield deal since the onset of Covid-19 — was an encouraging sign for other issuers from the country.

Latin American bond bankers said that B2/BB- rated Mexican telecoms company Total Play Comunicaciones was the ideal name to take advantage of a swell of risk appetite on Monday as the company sold its first ever international bond in a market that favoured higher yielding credits amid the sell-off in US Treasuries. But Lat Am sovereigns could be back as soon as Tuesday as bankers expect a wave of issuance from the region.

Spreads on Latin American bonds tightened sharply during US election vote counts on Wednesday in a promising — if only preliminary — sign for potential issuance conditions after the result is declared.

Bond markets in Latin America were quiet on Monday ahead of Tuesday’s US election. But the Mexican peso, and bonds issued by state-owned oil giant Pemex, could be most vulnerable to a surprise or uncertain result given they are two of the most liquid assets in EM.

Total Play Telecomunicaciones’ failure to appear in primary markets this week was less surprising to bond bankers than the fact that the Mexican telco had planned to sell a debut deal the week before the US elections, as equity volatility in that country made for a weaker tone in Latin American credit markets.