A handful of Latin American issuers are lining up to tap the cross-border market in the short term, despite volatility in US Treasury rates and uncertainty over whether Greece will be able to pull away from the verge of default.
A Greek default will send shockwaves through the market
(John D. Carnesslotis)
Brazil’s telecom Oi ventured to the European market, selling a 5.625% €600m ($675m) 2021, while Banco Agricola sold a 6.75% $300m 2020 bond and Metro de Lima Linea 2 priced a5.875% $1.155bn 2034 securitized note. The El Salvadorian and Peruvian issuers were heard to take hefty order books, which show the market is ripe for rare deals that often face headwinds at times of volatility.
“I think it’s back. Once Petrobras’ issues were cleared … that recently opened the door for other issuers,” said a DCM source. “If they need it, they will keep on going.”
Yet, the danger that Greece may default and the surge in US Treasury rates is casting doubts about the short term in the European and US markets. Mexico’s Comision Federal de Electricidad (CFE) was forced to sell a 6.125% $700m 2045 bond above initial price thoughts on Tuesday as US Treasury rates surged.
The 10-year and 30-year Treasury rates hit 2.5% and 3.22%, respectively, on Wednesday, their highest level this year.
But the volatility is not deterring Latin American issuers. Jamaica is on the road, ahead of a possible benchmark bond as it aims to raise funds to settle a debt with PDVSA. The Dominican Republic pulled a similar deal in January, when it raised $2.5bn and used the proceeds to pay $1.93bn to the Venezuelan oil company.
Utility AES Panama is heard to be meeting investors for a bond sale and a liability management exercise this week. Meanwhile, Honduras could return to the cross-border market in the short term, the country’s finance minister Wilfredo Cerrato recently told LatinFinance. LF