South America

Syndicate bankers say more Latin American issuers could follow Argentine oil and gas company YPF and Brazilian state-owned bank BNDES in buying back existing bonds as low dollar prices make tenders attractive and can provide investors with liquidity.

As the market waits for Brazilian banks to launch the first covered bonds out of the country, market participants from the country say it provides the lenders with a useful new instrument. But whether they can reach investment grade status in euros or dollars depends on currency risk mitigation, according to a Moody’s official.

Brazilian state-owned development bank BNDES is looking to buy back up to $1.65bn of existing debt after launching tender offers for two dollar bonds.

Investors’ eyes are on the Middle East this week as a slew of borrowers bring Sukuk trades to market, but while hopes are high for successful deals, a Turkish central bank rate decision looms large in investors’ minds.

Argentine state-owned oil and gas company YPF is looking to buy back all of its dollar bonds due in December, offering a small premium over face value.

A positive day for Argentina’s bonds on Thursday did not reverse its inverted yield curve in dollars as analysts say investors are becoming ever more concerned about the country.

Brazilian pulp and paper company Suzano’s decision not to announce a deal the day after finishing an investor roadshow this week left bankers wondering exactly which Latin American issuers would find conditions ripe for a new deal.

Bond bankers covering Latin America will have all eyes on Brazilian pulp and paper company Suzano on Thursday as it could become the first company from the region to issue in dollar markets in nearly two months.

Emerging market bonds are still under pressure from macro factors, but investors have plenty of capital markets business to keep an eye on as the pipeline, particularly in the Middle East, swells with deals.

The Chilean arm of Spanish lender Santander returned to bond markets on Tuesday with a Sfr115m ($118m) Swiss franc bond maturing in five years and three months.

Argentina’s plan to accelerate its fiscal adjustment left some Buenos Aires-based analysts satisfied on Monday, but all eyes will be on the reopening of the US market on Tuesday to know whether the government has won back the confidence of markets.

As Argentine bonds finally found a floor last Friday, analysts said that the big adjustment in the Argentine peso may have happened. But the week of volatility drove S&P to become the first rating agency to take action on the sovereign since the turmoil began.