South America

Two high profile Latin American issuers brought the region’s corporate sector back into play on Thursday. Mexico’s Grupo Bimbo and Brazilian lender Banco do Brasil both managed hefty spread tightening after offering conservative price talk, much like the EM sovereigns that dominated primary markets.

Argentine gas pipeline operator Transportadora de Gas del Sur (TGS) became the latest Latin American corporate to join the new issue pipeline on Thursday, as bankers predict market conditions will become friendlier.

The first investment grade sovereign trades from Latin American in more than two months left the sell-side feeling more optimistic about the pipeline as issuers were finally able to enjoy relative stability in broader markets.

Moody’s said that it believed fiscal reforms in Brazil were inevitable no matter who wins October’s election, removing the country’s negative outlook just weeks after the rating agency’s peers downgraded the sovereign.

After international investors placed nearly $450m-equivalent of orders for the Province of Buenos Aires’ peso-denominated floater last week, bankers and investors said that issuers in the country may favour local currency over dollars in coming weeks.

The Province of Buenos Aires was ready to price a Euroclear local law peso floater on Thursday evening as investors showed appetite for Argentina’s positive real interest rates despite volatility in broader markets.

Three of Brazil’s most important issuers received overwhelming responses to tender offers in the last week, as the country’s corporates focus on liability management.

Rio Oil Finance Trust, the SPV through which Rio de Janeiro’s state pension fund RioPrevidencia issues bonds backed by royalties from state oil giant Petrobras, has a knack for timing.

Brazilian bonds rallied on Thursday after the Supreme Court ruled that former president Lula Inácio da Silva must go to jail before exhausting his last appeal against a corruption conviction — effectively ruling him out of October’s presidential election.

Grupo Bimbo, the world’s largest bread maker, will begin meeting fixed income investors on Thursday as it plans a subordinated perpetual hybrid bond, just after Standard & Poor’s said the company was deleveraging more slowly than expected.

Argentina’s largest province is planning to issue around $496m of peso-denominated notes this week and will look to sell a portion of the bonds to international investors.

Brazilian mining giant Vale has completed the buy-back of $1.75bn in dollar bonds after more than half of the owners of its 4.375% 2022s agreed to sell their notes.