Issuers Prep Bonds in Volatile Market

Close to $2.5bn in new LatAm bond supply is sitting in the immediate pipeline, but whether much of that sees the light of day will depend on events in the broader markets, say bankers. After a brief spurt of issuance earlier this month, activity was reduced to a trickle last week with just the Province of Buenos Aires raising $250m through a retap of its 2015s, but a failure to reach a consensus on pricing forced other borrowers to either extend deadlines or indefinitely postpone deals. Worries over European and US debt problems are threatening to close windows as the buyside seeks extra premiums to compensate for increased risks. More bad news from the US and Europe this week could spoil the fun for LatAm issuers preparing to issue. These include Argentine oil company YPF, Guatemala’s Banco Industrial, oil services credit Quieroz Galvao, sugar and ethanol concern Usina Vista Alegre and the Dominican Republic. This comes as several companies carry out liability management operations involving the issuance of new bonds. Chile’s AES Gener, for instance, is looking to sell a new 2021 as part of its exchange and tender, while Argentine utility Transener wants to do the same. This doesn’t include new names that are also heard plotting bond sales such as Argentina’s Grupo ODS, which is thought to have mandated Credit Suisse for a $150m 2018. If market conditions stabilize YPF could be the first off the block with an up to $300m 8-year, 7-year average bond (Ba2/BB minus). The subscription period has now been extended to July 22. The Argentine blue-chip name wants to push out a marquee trade, but it may have to show some flexibility on pricing versus comp Pan American Energy. “[YPF’s postponement] is a precautionary measure on the issuer’s part,” says one trader Friday. “Markets have stabilized post the Province of Buenos Aires tap so I would expect them to put out guidance Monday sometime, if they can overcome their pride to price flat to Pan American Energy.” On Friday PA