Sovereign Space Reopened, But Few Left

Brazil’s well-received $750m retap of its 5.875% 2019 bonds comes on the crest of EM market rallies and diminished risk aversion, and paves the way for the other sovereigns to follow. However, those wanting funds may have already issued. “Most sovereigns who need money have already gone, though you can’t rule out some pre-financing if yields continue to be good,” says an EM-dedicated investor. “In this kind of environment where we don’t know if we’ve recovered, you can always issue to have an insurance policy,” says another. Mexico, Panama and Peru have issued this year, and Colombia has gone once and already reopened. Chile was considering a cross-border issue earlier in the year, but appears to have reconsidered as copper prices have risen. Uruguay has told LatinFinance that it might consider a pre-funding dollar bond earlier in the year. January and February issuers who paid more are unlikely to be kicking themselves, however. “You can never be sure if good conditions will last,” notes a DCM banker.