South America

With returns on developed market bonds being squeezed as never before, debt analysts are heralding emerging markets as the place for investors to be in 2021. Yet the faster the global economic recovery, the more vulnerable EM fixed income will be to what has often been its downfall: any signal of tighter global liquidity conditions, write Mariam Meskin and Oliver West.

As year-end approaches and investors look for a breather, Latin America’s regular issuers usually spend December preparing for the traditional January funding round. But two of the region’s most prolific borrowers could not resist the historically low funding costs on offer this week, tapping existing bonds to buy back shorter-dated paper.

Latin American power generation company EnfraGen debuted in the international bond markets on Wednesday, benefiting from the strong performance from the region’s last power sector issue to price inside where some investors were expecting — despite a leverage ratio of nine times.

Colombia’s finance ministry said on Wednesday evening that it had taken the “first step to entering the bond market for sustainable development” after Congress approved the issue of thematic bonds.

Paraguayan beef exporter Frigorífico Concepción held calls with bond investors on Monday as it looks to tap its only international bond for the second time.

Chilean government-owned copper producer Corporación Nacional del Cobre de Chile (Chile) became the latest Latin American borrower to take advantage of rock-bottom bond yields to refinance existing debt at historically low yields.

Latin American power generation company EnfraGen will look to sell $710m of split-rated 10 year senior secured notes this week, nearly three years after it postponed an earlier attempt at tapping bond markets.

Latin America primary enjoyed a rare bustling start to December this week with three deals catching the eye for different reasons, despite several market participants saying they were ready for a calmer end to the year.

Argentina’s second largest provincial issuer, Córdoba, improved its consent solicitation to bondholders on Thursday, increasing proposed coupon payments. The offer comes as Argentine provincial debt talks gain momentum, but Córdoba is still some way off its bondholder group’s latest proposal — though the creditor committee has not yet reacted to the improved offer.

After monitoring bond markets for several weeks, Brazil took the plunge on a slightly softer day on Wednesday to raise $2.5bn via the reopening of three different notes.

The Argentine Province of Río Negro on Tuesday launched a consent solicitation that has already earned the support of more than half of bondholders after it improved an initial restructuring offer. But analysts warned that Argentina’s deteriorating economy was forcing provinces to be less aggressive in renegotiating their obligations.

Brazilian steel producer Gerdau will repurchase $300m of dollar bonds with cash as its profits rise thanks to strong demand for steel.