Mexico

In a shortened week in the US there was still time for heavy volatility in Lat Am bond markets, with sharp moves in Mexico particularly concerning for DCM bankers.

Investors in Latin American bonds are giving thanks this week, as Wednesday brought some small respite on Wednesday ahead of Thursday’s US holiday. Some of the region’s more battered paper rallied slightly — though the consensus is still that issuance is finished for the year.

Bankers insist that the market, though deserted, is still open for at least a couple more weeks, but with the new issue premiums investors are demanding, it is difficult to persuade issuers to print.

Lat Am bond bankers did not seem overly worried about their Mexican deal pipeline despite bond markets being shocked by the cancellation of Mexico City’s new airport last week.

Bonds issued to build Mexico City’s now cancelled new airport have risen from last week’s lows after as analysts declared the risk of default to be very low after the incoming president met with airport contractors on Monday.

Leasing company Engenium Capital was holding follow-up calls with investors on Monday as it stays engaged with the market ahead of a proposed dollar debut, but bankers said timing was tricky for any Latin American names — let alone Mexican.

Mexico this week sent global markets a stark reminder that its politicians were not afraid to follow through on radical policies as the incoming president cancelled the capital city’s new $13bn airport. The move caught fund managers across the world off guard, despite the fact it had been a much-advertised campaign promise, writes Oliver West.

Fitch took swift action on Wednesday Mexico’s rating after incoming president Andrés Manuel López Obrador (Amlo) cancelled the capital city’s proposed new airport, placing it on negative outlook.

Bondholders in Mexico City’s proposed new airport were left speculating how Andrés Manuel López Obrador (Amlo), the country's president-elect, planned to return their money on Monday after the said he would cancel the project.

GE Capital’s former Mexican equipment finance business, known as Engenium Capital, is set to give Latin American debt markets a new test with a proposed subordinated perpetual bond offering.

Three Latin American companies managed to raise dollar bonds on Thursday in the face of challenging market conditions, but of the five that completed roadshows on Wednesday, one was left evaluating feedback, having announced guidance, and the other had not appeared.

Mexican state oil company Pemex returned to bond markets on Tuesday after weeks of speculation to find a wide open market and easily clinch a $2bn long 10 year broadly praised by bankers.