South America

With Covid-19 measures expected to add $4bn to Chile’s debt issuance this year, the sovereign is still to define the source of another $4.5bn of funding, according to the country’s head of international finance.

While emerging market bond investors are spending their days in the Covid-19 crisis battling with poor liquidity, cash calls from end investors, and even the odd new issue, debt relief has remained a threat, albeit only a vague one. But at policy level the topic is of growing importance, and what began as a matter for official institution creditors took a step closer to embroiling the private sector this week. Ross Lancaster, Phil Thornton and Oliver West report.

When Ecopetrol, which has been talking about bringing a bond for a long time, chose to do so last Friday, after an oil price crash in the middle of the coronavirus pandemic, it took the market aback. Fridays, after all, are not when any self-respecting Latin American bond issuer comes to the market. But there is nothing typical about Latin America’s primary markets these days.

Corporación Andina de Fomento (CAF), the South American development bank, could follow fellow Lat Am multilateral Cabei into bond markets after mandating for an SEC-registered US dollar deal.

Chilean government-owned copper miner Codelco said on Wednesday that it had sought to increase its cash position in the face of market uncertainty after wrapping a well oversubscribed return to bond markets.

With Covid-19 measures expected to add $4bn to Chile’s 2020 debt issuance, the sovereign is still to define the source of $4.5bn of funding for this year, according to the country’s head of international finance.

When Ecopetrol, which has been talking about bringing a bond for an absolute age, chose to do so last Friday after an oil price crash and in the middle of the coronavirus pandemic, it took the market aback. Fridays after all, are not typically when any self-respecting Latin American bond issuer comes to the market. But there is nothing typical about Lat Am primary markets these days.

Bondholders and analysts said that the Province of Buenos Aires had offered slightly better terms than the Argentine sovereign with its distressed debt exchange, but the offer, for $7.148bn of debt, is still likely too aggressive to gain traction with investors.

Debt capital markets bankers had been hoping for at least two years that Colombian oil company Ecopetrol could be persuaded to issue a bond. When the government-owned borrower finally opted to tap bond markets last week for the first time since 2016, it caught the eye by doing so with oil prices at historic lows, in the middle of the coronavirus pandemic and, unusually for a Lat Am issuer, on a Friday.

International capital markets are facing a reprise of one of their most eerily familiar tales in the next month: the will-they-won’t-they tension of the run-up to an Argentina default, writes Oliver West.

Paraguay continued the relative rush of Latin American issuance on Thursday with a heavily demanded $1bn 11 year bond becoming the second high yield sovereign from Latin America in two days to tap bond markets to fund Covid-19 mitigation.

BNP Paribas has hired from Standard Chartered to bolster its Latin American debt capital markets team, GlobalCapital understands.