Mexico

Bonds issued by Mexican state oil company Pemex have had a torrid week after support measures announced by the government did not reassure markets.

Pemex's bonds were again the most under-performing in Latin America markets on Tuesday as investors continue to punish the company for last Friday’s apparently underwhelming government support package.

Pemex bond prices slid further on Friday after analysts said Mexican president Andrés Manuel López Obrador’s measures to support the state oil giant would not be enough to prevent continued deterioration in its credit quality.

Brazilian lender BTG Pactual will hit the road next week as it looks to capitalise on improving investor sentiment around Brazil, in order to issue a 10 year non-call five Basel III compliant tier two note.

Bonds from two of the most important issuers in Latin America sank this week as they neared fallen angel status, but some investors said that there was a danger of overshooting.

Despite some investors saying it had been clear for some time that Pemex was on a gradual decline towards junk status, a two notch rating downgrade from Fitch appeared to catch bondholders unaware as the Mexican state oil giant’s debt slumped in secondary markets.

Mexican non-bank lender Crédito Real has cancelled a tender offer and will now issue a smaller bond than initially planned, owing to market concerns regarding potential government policy, GlobalCapital understands.

Emerging market investors are enjoying an excellent start to the year in the secondary market, but primary supply has not maintained its strong start to the year. Bankers and investors are confident that issuers will get moving soon though.

Non-bank lender Crédito Real will show how far investor appetite for Mexican risk stretches as it looks to become the first sub-investment grade borrower from the country to issue in international bond markets in nine months.

Mexico’s new head of public credit, Gabriel Yorio, has told GlobalCapital investors were receptive to the government’s messages, after it received hefty demand for its first bond issue since Andrés Manuel López Obrador took office as president on December 1.

Latin American bond bankers were urging issuers to head to market on Thursday after Mexico and Uruguay emphatically showed there was strong appetite for new paper.

Bond buyers gave Mexico’s new government a vote of confidence on Wednesday as they piled into the first bond deal from the sovereign since Andrés Manuel López Obrador (Amlo) became president.