Mexico

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.

Total Play Telecomunicaciones, the Mexican telecommunications company, is approaching international bond investors for the first time. With some EM investors saying they are ready for a pre-US election lull in bond issuance and mixed fortunes for recent new Latin America deals, it could provide a good test of the state of play in the region’s primary markets.

As even the IMF asks Mexico to spend more to prop up the economy during the Covid-19 crisis, deputy finance minister Gabriel Yorio denied accusations that the country’s forthcoming budget was austere. Despite concerns in the market about the lack of policy support for the economy, some investors see value in the country’s bonds.

The Argentine City of Córdoba on Monday said it was still negotiating with a creditor group holding “a significant amount” of its $150m international bond, but that it had not been able to reach an agreement before non-disclosure agreements expired.

Mexican state-owned oil company Pemex offered a winning mix of liquidity and yield on Thursday when it made its first visit to the bond markets since January with a deal that was smaller and shorter in maturity than its usual offerings.

Fresnillo, the Mexican mining company, notched a first bond in seven years close to where bankers spotted fair value on Tuesday to reassure market participants that issuance are good for strong credits.

Fresnillo plc, the Mexican mining company, will begin meeting fixed income investors on Wednesday as it becomes the latest Latin American company to seek new bonds to fund a repurchase of old ones.

Japan could be Mexico's next debt raising destination on its quest to build a "sustainable yield curve," following last week's bond linked to the UN's Sustainable Development Goals, said Gabriel Yorio, the country's deputy finance minister.

BBVA’s Mexican subsidiary made an opportunistic return to the international markets on Tuesday, raising dollar funding at a record low cost ahead of a bond maturing next March.

BBVA’s Mexican subsidiary, Bancomer, on Tuesday provided one of the clearest examples yet of the attractiveness of international bond markets for Latin American borrowers as it notched the lowest ever coupon on a dollar deal from a bank from the region.