Mexican Stars Relight DCM

Successful bond offers from Mexican blue chips America Movil and Bimbo are driving LatAm corporates back on the road for meetings with a cash-rich overseas buyside. However, volatility – while less than in May – is still present enough to be a factor in determining how many more deals materialize, as highlighted by Thursday’s sell-off. Mexican homebuilder Geo is heard pricing a $200m 2020 as soon as today, while Brazil’s Banco Cruzeiro do Sul looking to come with a 3-year next week. Others, such as Brazilians CSN and Banco Votorantim, are planning to visit the buyside with an eye on possible transactions. There are other LatAm issuers waiting in the wings, DCM bankers say. Wednesday’s successful Bimbo trade – the first external debt foray from a regional issuer in more than 7 weeks – as well as bonds from EM corporates beyond LatAm, are lifting jaded DCM spirits. Bimbo’s $800m 4.875% of 2020 tightened after issue, though widened back to around reoffer of UST+180bp in Thursday’s rout amid a spike in Greek CDS. “If there is a window, I would advise [issuers] to take it,” says a US West Coast-based EM fixed-income portfolio manager. The investor notes that the seasonal July-August hiatus is approaching, and there is still a significant amount of uncertainty about the rest of the year. There should be an opportunity next week, though markets will slow significantly in the latter part as the US heads to a July 4 long weekend. And the buyside is liquid and seeking opportunity. “It’s a good time, though I don’t feel like the markets are as good [this week] as they were last week,” says a DCM banker. He predicts an active July, though not a repeat of March or April’s flurry. Issuers who do go to market may have to concede more of a new issue premium because of the volatility, bankers note.