DCM Braces for Brisk January Sales

Issuers, investors and bankers heading are all hoping that the New Year will extend the strong DCM run of 2009. As several of the usual, and some not-so-usual, suspects prepare for January, optimism remains high. “We still have good inflows and there’s still a lot of interest in the market,” says Cathy Elmore, who manages $550m in EM debt at Blackfriars Asset Management. “As long as treasury yields are low, I think a lot of the new issuers will still be able to come to the market with ease.” She expects frequent names like Mexico, Brazil, Petrobras and Pemex to be among the first to tap in January. Colombia has also typically been a January/February borrower. Some less regular names should also be hitting the market soon, including Argentina, which has filed a $15bn shelf with the SEC. The sovereign hopes to cut a January deal with 2005 holdout creditors – possibly paying using a fund created with $6.66bn in forex reserves – followed by a new issuance. The market expected a 10-year of perhaps $1bn in size. Barclays, Citi and Deutsche worked on a pre-crisis workout attempt, and they are favorites to bring Argentina’s first bond in almost 10 years. Elsewhere, the Dominican Republic has reiterated its intentions of coming to market in Q1. The sovereign has said it wants to borrow $500m-$600m in 2010, with the market expecting a 10-year through Barclays and Citi. DCM bankers remain busy this week and forecast a brisk January as long as investors keep their wallets open. “I have 10 mandates,” says a banker at a major bond house, adding that the deals will likely be spaced out through January and February. “We’ll see a lot of deals early, we’ve got a very good backdrop,” says another DCM official. There was more than $95bn equivalent in DCM issuance this year, almost double the $54bn seen in 2008, according to Dealogic.