South America

As Argentine assets endured a torrid Monday on the back of Mauricio Macri’s poor performance at the weekend’s primary, analysts warned that the peso’s harsh devaluation would push public debt — which is largely in hard currency — up to perilous levels. This could accelerate a sovereign default, said Capital Economics.

Bond market analysts said that conversations about Argentina assets would return to the likelihood of default as market-friendly president Mauricio Macri suffered a heavy defeat in Sunday’s primary elections.

The rout of the incumbent president Mauricio Macri in the first round of the Argentina elections has investors worried. Argentina’s debt, and that of other 'vulnerable' credits, suffered a huge sell-off early on Monday. But bankers believe that it was not so bad that the primary market will not reopen in September.

Debt capital markets and syndicate bankers covering Latin America say they are enduring a busy week despite no new issuance as they expect a busier than usual September.

Brazilian protein producer JBS will continue its active liability management with the buy-back of $700m of bonds maturing in 2023 and 2024.

Swiss firm responsAbility Investments has closed a $175m microfinance CLO via JP Morgan, revitalising an industry which last saw issuance before the financial crisis.

A senior secured bond from Brazilian MV24 Capital performed well on the break on Friday, shrugging off global market concerns, with new issuance from Latin America likely to be limited in the next few weeks.

International investors this week enthusiastically bought a $500m ‘sustainable transition bond’ issued by Marfrig, the second biggest Brazilian beef producer. The deal highlighted its efforts to make its supply chain more sustainable. But Greenpeace, the environmental NGO, argues it is impossible to be sure the supply chain does not include harmful practices.

Investors happily agreed to buy new senior secured debt from a Petrobras service provider at a healthy pick-up to the oil giant’s curve on Thursday, but a cancelled deal from Argentina suggested idyllic conditions for Lat Am issuers were slightly fading.

The latest idea captivating sustainable finance enthusiasts is transition bonds.

Marfrig Global Foods, the Brazilian beef producer, has stirred up the green finance market by issuing a $500m ‘sustainable transition bond’. To some, it is a template for a new asset class that can help finance the global economy’s shift to lower carbon emissions. To others, it is a shocking case of greenwashing. By Oliver West and Jon Hay.

Brazilian conglomerate Cosan will repurchase around 60% of its 2024s after wrapping up the early-bird stage of a tender offer.