South America

Latin America bond investors cheered moves from the US government to up the pressure on Venezuelan president Nicolás Maduro to leave office this week, but a side-effect of sanctions left PDVSA creditors trapped, to the confusion of many. Oliver West reports.

Pacific Gas & Electric has gone bankrupt with $52bn of debt, blaming forest fires that seared California during 2018. Vale, with $11bn, has been downgraded to the bottom edge of investment grade after its horrific dam burst last Friday.

Following confusion over the effect US sanctions against Venezuelan state oil company PDVSA could have on US bondholders, the final picture is growing clearer and the unfurling scene is not a pretty one.

A fresh round of US sanctions on Venezuela’s government can only squeeze President Maduro further, said bond investors, but meanwhile there was some confusion on Tuesday regarding the apparent ban on secondary market trading of PDVSA debt by US persons.

A fresh round of US sanctions on Venezuela’s government will add to the pressure on 46th president of Venezuela Nicolas Maduro to clear off, said bond investors.

Brazilian pulp and paper producer Suzano returned to bond markets for the third time in five months on Tuesday, tapping its 2029s for a further $750m.

The US sanctions slapped on Petroleos de Venezuela (PDVSA) this week look similar to those that have just been removed from Russia’s EN+ and Rusal. The move indicates that the US believes in the effectiveness of sanctions and is happy to keep deploying them. Emerging markets investors should beware.

The largest and best rated airline in Latin America has mandated six banks to lead a bond sale as it prepares to issue $500m-$700m of senior unsecured bonds.

Corporación Nacional del Cobre de Chile, the largest copper producer in the world, became the first Latin American quasi-sovereign to tap bond markets this year as it returned to the long end of the curve.

Brazilian building materials company Votorantim Cimentos has increased the size of a tender offer and given bondholders more time to participate, it said on Friday.

Investors who took a chance on an unusual ice-breaker for the 2019 Latin American corporate bond market were rewarded on Thursday as the bond was up 2.75 points the day after pricing.

South American sovereign Colombia pulled off what one banker called a textbook trade on Wednesday, finding strong demand, tightening significantly from price talk, and then seeing the notes edge tighter in the secondary.