Emerging Markets debt trading volume was $1.58trn in Q1 2012, a 9% decrease from Q1 2011, according to EMTA, though the total represents a 21% increase from Q4 2011. EM Eurobond trading volume was $531bn in the first quarter, down 10% from a year ago. Brazil’s 2021 bond ($7bn volume) was the second most traded behind Russia’s 2030 ($14bn) in the quarter, with Colombia’s 2021 ($6bn) coming third and Mexico’s 2022 ($5bn) in fifth. Turnover in local market instruments stood at $1.04trn in the first quarter, accounting for 66% of total volume, and down 7% from the year before. Brazilian local instruments were the EM world’s most frequently traded local markets debt, $187bn, followed by Mexico, with $175bn. Brazilian instruments were also the most frequently traded when both Eurobonds and local bonds are included, with $250bn, followed by Mexico’s $231bn volume.
Category: Bonds
JSL Closes Debentures
Julio Simoes Logistica has completed a BRL200m ($98m) sale in Brazil’s domestic bond market, according to Anbima. The 2016 bond pays the DI+1.85% and amortizes in equal parts in each of the final 2 years. Itau managed the sale, done under the rule 476 restricted format.
Brazil Sub-Sovereigns Need Broader Debt Alternatives
Reforms are needed to give Brazilian states and municipalities the ability to issue debt to make investments necessary to improve infrastructure, leaders say. The means to attract investment, particularly foreign funds given Brazil’s low savings rate, are too restricted to get the country’s planned projects completed on time. “The moment one of the states wants to do something it is in conflict, because it has to be authorized [federally],” says Dorothea Werneck, Minas Gerais’ secretary for economic development, when discussing project financing. She notes that federal regulations may not work the same for all of Brazil’s different states. Minas Gerais is working on development bank funding through France’s ADF agency, with private banks including Credit Suisse participating. State-owned Minas Gerais Particpacoes is preparing BRL400m ($194m) domestic bond, and the Codemig development agency is planning a cross-border bond. “It’s a fact that the states are in a tough position to get financing. With everything that needs to be done with infrastructure, there should be a new way to find a solution, ” says Roberto Paolino, financial institutions and public sector head at Citi. Limitation on states taking debt puts Brazil behind other markets like the US, or even Argentina where sub-sovereign entities have issued abroad recently. “It makes sense that maybe now is the time to revisit that. The international market would definitely have appetite for good credits – the larger states like Sao Paulo, Minas Gerais, Rio de Janeiro and others. Given the demographics and the need for infrastructure, it is really the time,” he adds. Multilateral funds have been used to some degree, but there are limitations here too, and given the size of funding needs, all options need to be on the table. Public-private partnerships and concessions should remain in the mix for getting projects financed, but all of the means ought to be available to tap investment. “The PPPs and concessions can b
Road Operator Clinches Local Bond
ViaRondon, the operator of a toll road in Brazil’s Sao Paulo state, has completed the sale of BRL300m ($148m) in the domestic bond market, according to Anbima, finishing a process it had put off earlier in the year. The 2027 inflation-linked bond pays 7.75%, and amortizes over the final 10 years. Banco Votorantim managed the sale, done under the rule 476 restricted format.
VB Prices MXP Bond
Mexico’s Volkswagen Bank has raised MXP1bn ($72m) in the domestic bond market. The 2016 bond priced at TIIE+45bp, in line with TIIE+40bp-45bp price talk. Demand was 2.5x, with a investment funds, retail investors, banks and insurance companies participating, according to a source familiar with the transaction. Proceeds are marked for the bank’s operating needs. Banamex and Ixe managed the sale, rated AAA on a national scale. The bank sold MXP 1bn in 3-year domestic bonds in December, at TIIE+50bp.
Vitro Restructuring Sees Setback
A US court has denied Vitro’s request to enforce its Mexican bankruptcy plan in the US, the Mexican glassmaker says. Though the court has decided to uphold Vitro’s reorganization plan – approved in Mexico earlier this year – at the Vitro SAB level, it has refused to enforce the release of Vitro’s US subsidiaries from liability on their guarantee obligations under Vitro’s now-restructured bonds. It found that the Concurso Mercantil (LCM) plan approved in Mexico which extinguishes the guarantee claims of objecting creditors that were given under a formal legal agreement or indenture in the US against non-debtor entities that are subsidiaries of Vitro should not be recognized. “Such order manifestly contravenes the public policy of the United States,” Judge Harlin Hale wrote. Hale found Mexico’s LCM to be a fair process and worthy of respect, but that in this case the Concurso plan discharges the unsecured debt of the non-debtor subsidiaries. “The judge chose not to criticize Mexico but picked on those things that were thoroughly incompatible with the US bankruptcy code and US policy,” American University professor Arturo Porzecanski tells LatinFinance. Vitro says it will appeal the court’s refusal to enforce the Vitro restructuring at the subsidiary level. So far, no US bankruptcy court has ever denied a request to enforce a plan of reorganization approved under the Mexican bankruptcy law in its 12 year history. The court will stay its decision until June 29 to give Vitro time to seek an appeal.
B2W Closes Debenture
Brazil’s B2W has completed the sale of BRL300m ($148m) in domestic bonds, according to Anbima. The 2017 bond pays 120% of the DI, and amortizes in 3 equal parts in each of the final 3 years. The online retailer resulting from the merger of Submarino and Lojas Americanas’ online business is raising funds for working capital. Bradesco managed the sale, done under the rule 476 restricted format.
Bermuda to Meet Investors
Bermuda is planning investor meetings next week. The island nation will visit fixed-income accounts starting in London Monday and visit Los Angeles and Boston before finishing in New York the following Monday. HSBC is coordinating. The sovereign has an Aa2/ AA minus/AA+ rating. Its previous visit to the DCM was its first, raising $500m in 10-year bonds in 2010, at a 5.603% yield. The bonds were heard trading around 3.40-3.50% Thursday.
Belize Bondholders Form Committee
A steering committee and ad-hoc group of at least 10 bondholders representing approximately $200m in Belize bond debt has formed to engage the government to review any possible amendments concerning external debt, specifically the country’s 2029s. “Any proposed amendment that results in a net present value or principal loss to creditors would not, based on the committee’s current understanding of the situation in Belize, be considered acceptable or, for that matter, necessary,” says AJ Mediratta, partner at Greylock Capital Management and chairman of the committee. Belize on March 19 issued a public statement announcing the commencement of a comprehensive and urgent review of its external public sector debt and contingent liabilities. Belize says it has appointed a debt review team and has retained external advisors to support the process of preparing comprehensive fiscal and macro projections, and identifying debt management alternatives. Called “super bonds” as they represent at least 40% of GDP, Belize’s 2029s were trading at 53 in price Wednesday afternoon. S&P has downgraded Belize’s long-term sovereign ratings to CCC+ from B minus after the country’s Prime Minister Dean Barrow raised debt service as an election issue. Moody’s has downgraded Belize’s credit rating to Ca from Caa1.
Colombian Still Mulling Domestic Issuance
Colombian power company EPSA has extended its COP900bn ($505m) program until 2015, though it has not yet set a timeline for issuing the remaining COP300bn in bonds or commercial paper, says a person familiar with the company. The funds are to be used for investment, working capital and the replacement of other debt. EPSA, rated AAA on a national-scale, issued the program’s first COP600bn in April 2010.