South America

The consortium building the second line of the Lima and Callao Metro in Peru will meet bond investors this week as it looks to finance a mandatory redemption of a portion of the borrower’s existing notes caused by delays in the project.

Five Latin American companies and Caribbean-based Cable & Wireless (C&W) all sold dollar deals on Thursday, as borrowers jumped on improved expectations of a US rate cut and seemed to shrug off a sell-off in US Treasuries later in the day.

Argentina’s leading telecoms company became the latest borrower from the country to tap international investors on Thursday, but though bond investors showed plenty of enthusiasm for Telecom Argentina’s bond comeback, some were wary about oversupply from the country.

Argentina’s best borrowers continue to seek to take advantage of a recently opened funding window in international markets, with Telecom Argentina plotting to sell new debt to refinance old bonds.

While US market participants were on holiday last week, Brazil’s lower house passed legislation that is central to bond investors’ optimistic thesis on Latin America’s largest economy.

Brazilian state-owned oil company Petrobras is to continue its deleveraging process by using cash to buy back up to $3bn of existing bonds, giving first priority to euro and sterling paper.

Two Latin American companies announced bond roadshows this week, with a third launching a tender that will require a new issue, as the region’s issuers flock to the low rate environment and gradually rehabilitate disappointing issuance volumes.

Pampa Energía followed YPF into the international bond markets on Tuesday as Argentine issuers returned after a 14 month hiatus. Investors believe there is scope for certain corporates and even provinces from the country to take advantage of renewed market access.

The Latin America primary bond market was quiet this week thanks to dollar investors instead enjoying the US Independence Day holiday, but bankers say sentiment is at its strongest at least since January 2018 as several of the region’s issuers lined up roadshows.

Colombian utility Empresas Públicas de Medellín (EPM) will begin fixed-income investor meetings on Thursday and could issue dollar bonds for the first time in 10 years as part of a $1bn-equivalent deal to refinance debt.

Bond market participants in Argentina say that more issuers from the country could look to pre-empt election-related uncertainty and take advantage of benign fundraising conditions after Pampa Energía followed in YPF’s footsteps with a 10 year deal on Tuesday.

Bond investors will have a chance to give a further indication of their appetite for Argentine risk as Pampa Energía looks to follow in YPF’s steps and continue to reactivate the primary markets from the country.