Bond Issuance Yet to Abate Despite Record Volumes

After a week that saw over $10bn in new bond supply from LatAm corporates, bankers are anticipating more busy days this week as borrowers look to print before quarterly numbers go stale. With better-than-expected US job numbers bolstering sentiment on Friday, the region’s borrowers should be able to get a few more trades out the door, bankers say. This comes in the wake of what are record volumes for EM and LatAm cross-border trades year-to-date. According to Dealogic, volumes out of LatAm hit $26.52bn from 35 deals, topping the $17.44bn in volume and 27 deals seen during the same period in 2011. LatAm appears to be leading the way in EM, says one senior banker, with the region generating nearly $27bn over the first 5 weeks of the year, including Petrobras’s jumbo $7bn trade last week, versus a total of $58bn for EM overall. More deals are on the immediate horizon, with Brasil Telecom (Oi) and Dominican port terminal Caucedo preparing bonds for this week. Market chatter is also pointing to a possible issue from Comision Federal de Electricidad (CFE). The state-controlled utility met accounts late last year via BBVA, BNP Paribas and Citigroup, but never printed. The borrower last raised 10-year money with a $1bn 4.875% 2021, but it has long sought to extend to 30 years. The secondary price differentials between Pemex and CFE’s 2021s suggests some supply may be on the way, says one banker. “About two weeks ago CFE was 15bp-20bp tighter to Pemex, now it is 10bp wider,” he adds. The investment grade issuer (Baa1/BBB/BBB) should prove popular with large institutional accounts looking for some pick up in defensive sectors. “We should see more high-grade deals than anything,” says one US-based investor. “High-grade players in decent industries like oil and gas, mining and telecoms, can easily get $3bn-$4bn. It is great geographic diversification.” That said, lower-grade credits are having a good run and taking advantage of the fact that investors seem to be welcoming them