South America

Market volatility has led the Province of Buenos Aires to pause ahead of a planned $500m-equivalent peso-denominated bond issue, but it will continue to monitor market conditions.

Brazil and Trump-related turbulence left the Province of Buenos Aires waiting ahead of a planned peso-denominated bond, though bankers say Argentine issuance should resume shortly.

Corruption accusations made overnight on Wednesday against Brazilian president Michel Temer threw EM bond markets into turmoil just as they had already suffered a torrid day on the back of a Donald Trump-provoked slump in global markets.

What, on Wednesday, seemed to be primary capital markets gung-ho for any deal imaginable by Thursday looked more like a market on the skids as concerns intensified over the endless controversies dogging US president Donald Trump’s administration.

Latin America bonds did not emerge unscathed from the carnage in broader markets on Wednesday as several weeks of strong appetite for EM bonds were interrupted by the biggest US stock sell-off in eight months.

Emerging markets bond bankers can think of nothing to derail the ongoing bull-run and while this might point to hubris, this week’s trades have given no indication of fatigue.

The Province of Buenos Aires will look to sell around Ap7.5bn ($481m) of peso-denominated five year bonds in the coming days but has surprised some market participants by opting for a domestic law bond with a floating interest rate.

Bond investors in Latin America appear happier to be stretched by tight pricing than hairy credit quality after Brazilian state oil giant Petrobras pulled off an exceptionally tight bond return on Monday.

The provinces of Buenos Aires and Mendoza are planning to join the list of Argentine issuers opting to sell peso-linked debt after recent deals by YPF and Banco Macro.

A blow-out deal from Argentine energy company Capex reassured Latin American bond bankers that the market had shrugged off a handful of deals that did not run as smoothly as hoped.

Brazilian electricity company Cemig will return to bond markets towards the end of the month. It had failed to garner sufficient investor interest before its earnings numbers went stale.

Latin American bankers see a calmer period ahead for corporate new issues and some companies are already plotting deals for later in the quarter.