Expectations Low for CentAm, Caribbean Issuance

Despite welcoming conditions in the DCM, countries and corporates in the Caribbean and Central America aren’t expected to offer much in the way of new issuance in the next 6-12 months, speakers on an EMTA panel say. With El Salvador, Panama and Jamaica having issued this year, only the Dominican Republic – with $700m approved and Barclays and JPMorgan mandated – appears close to issuing. “Trinidad has $300m in the budget, but whether it does it or not depends on oil revenues,” says Franco Uccelli, senior economist at JPMorgan, noting that oil prices are much higher than the $65 level Trinidad anticipates in its budget projections. Costa Rica has also mentioned issuance following last year’s ratings upgrade, though the panel notes the benchmark-sized deal it would like would still require congressional authorization. Though cross-border corporate issuance is accelerating in other parts of LatAm, panelists don’t expect the trend to reach CentAm and the Caribbean. “The corporate sector is not as developed in these countries, and those that need to fund themselves are able to do so in the local markets,” says Sean Newman, EM portfolio manager at GE Asset Management. The local offerings of commercial paper, bank loans and multilateral financing are usually enough for large Caribbean and CentAm companies, many of whom have operations only in their domestic market. “There is not that great of demand from CEOs to establish international benchmarks or diversify their funding needs,” Newman says. All spoke on an EMTA panel in New York Wednesday.