Better than a Chevy

Latin America issuers were very busy this week. Brazil and Uruguay hit the global market and Chilean copper producer Codelco borrowed $210.5 million-equivalent with a local currency bond. Last week, Argentina raised over $300 million with a domestic market bond. What’s going on? Emerging markets and Latin America in particular were meant to suffer a hammering after S&P downgraded GM and Ford to junk status. The market begs to differ. Latin American bonds – even Ecuador – are trading above America’s carmakers. Indeed, the chance of big issuer like Brazil winning an upgrade looks pretty good while the likelihood of GM or Ford pulling itself off the junk heap don’t look too good. But don’t get too excited. Debt-addicted Latin America has a long history of punishing optimism. The debt crises of tomorrow are born in the bull markets of today – just remember what people used to say about Argentina ten years ago.