LatAm External Issuance to Decline

External bond issuance is likely to decline to below $12bn this year, according to Moody’s. The ratings agency says the financing needs of LatAm and Caribbean sovereigns will total an estimated $384bn in 2011, down from $410bn in 2010. Sovereigns will need to finance an average of 5.8% of GDP in 2011, down from 9.2% in 2009. The decline is mainly due to an increase in nominal GDP, and Moody’s expects continued economic growth and moderate fiscal results, which bodes well for future levels of financing requirements. The ratings agency says domestic funding by governments continues to rise. In 2011, the rating agency estimates that only 6.2% of funding needs in its sample will be sourced externally, down from 9.8% in 2009. External bond issuance is likely to be below $12bn this year, also on a declining trend. Mexico, has the largest 2011 funding needs at 11.1% of GDP, Peru has one of the lowest funding needs at only 0.5% of GDP.