The primary bond market for Latin American and Caribbean issuers is expected to remain steady through the remainder of 2025, as corporates and sovereigns continue to seek opportune moments to price deals in a volatile environment.
“There is so much going on and so many things that still need to be defined in the current context that is difficult to foresee an environment where the volatility stops or slows down,” says Gonzalo Álvarez-Cañedo, the US-based head of debt capital markets and private debt for Latin America at Santander CIB. “I think we are going to keep having volatility for the remainder of the year, at least.”
He adds that the third quarter could be similar to the second in activity, with issuers taking advantage of limited windows of opportunity to tap the market in June and July for covering funding needs and refinancing debts before the issuance winds down during the lull in August for summer in the northern hemisphere.
The region kicked off the second quarter with two deals totaling $1 billion on April 1, a day before US President Donald Trump announced import tariffs on much of the world. That roiled the global financial markets and forced issuers to put pending transactions on hold. Later that month, however, issuance picked up again with seven deals totaling $7 billion, as borrowers took advantage of a moment of reprieve for investors after Trump showed a willingness to negotiate with trade partners. May followed with $6.6 billion in 12 deals before picking up with $10.5 billion raised in 11 transactions in the first two weeks of June, according to data from LSEG.
This activity took the total issuance for this year through June 15 to $78.3 billion, up 39% from $56.5 billion, according to LSEG. The number of deals also increased over the same period, rising 24% to 89 transactions from 72, the data showed.
Finding opportunities
International bond sales by Latin American and Caribbean issuers over the past three years, January 1 to June 15
| Issue Date Totals | Proceeds Amount + Overallotment Sold This Market (US$ Mil) | Number of Issues |
| Year-to-date | ||
| 2023-01-01 – 2023-06-15 | 40,940.18 | 58 |
| 2024-01-01 – 2024-06-15 | 56,522.02 | 72 |
| 2025-01-01 – 2025-06-15 | 78,305.96 | 89 |
| YoY % Change | 39% | 24% |
After the tariffs announcement, Colombia reopened the market for the region’s sovereigns in mid-April with a two-part sale that totaled $3.8 billion, followed by Brazil raising $3 billion in its second placement of notes this year.
“Colombia was trying to pre-finance as much of its own needs as possible considering the volatility that could come,” an analyst says. “Both investors and the issuer were able to satisfy their objectives.”
André Silva, head of debt capital markets for Latin America at Deutsche Bank in New York, says the Colombian issue also paved the way for corporates in the region to tap the bond market again with higher-than-normal deals and demand.
“The fact that the deal got done in size was a first good sign that liquidity was still available for the right names and for the right time,” Silva says. “As the tone improved over the next few weeks, we saw several transactions coming out.”
On the corporate side, Colombian food processor Grupo Nutresa topped the ranking this year through June 15 with a two-part debut sale for $2 billion that was 2.7 times oversubscribed. Mexican cement producer Cemex trailed with a $1 billion green perpetual bond deal and Telecom Argentina with an $800 million placement that were 4.5 times and 1.6 times oversubscribed, respectively.
“Anyone that has been able to raise money this year is because it has been successful in positioning its credit and it has been agile to access the right market window,” says Santander’s Álvarez-Cañedo. “It takes a lot of energy to be successful in this market.”
TARIFFS
The surge in volatility following Trump’s tariff announcement has forced issuers from the region to step back and consider the impact on funding costs. The key for this is what the response will be from the US Federal Reserve in cutting the benchmark for interest rates this year, a forecast that became even harder in June after the United States entered the Israel-Iran war, according to analysts.
It could be heaven or hell, and that is how investors are seeing the market
André Silva, Deutsche Bank
“The most significant effect is how the level of uncertainty and volatility is keeping anticipated new issue premiums historically high in the low double digits for Latin America, as well as causing a steepening in the US Treasury yield curve that could make locking in long-end rates less attractive,” says Ricardo Tessarotto, director of debt capital markets for Latin America at Scotiabank.
“The 30-year US Treasury yields haven’t held in the range of 4.9% to 5% since before the [2008-08] global financial crisis,” Tessarotto says.
According to Silva at Deutsche Bank, if the Trump administration proceeds with its high tariffs policy, it would mean higher interest rates and spreads that would push up funding costs for issuers by the end of this year. However, if the administration eases up on its trade policies, that would have less of an inflationary and recessionary impact that would allow the Fed to cut rates.
“Under a no-recession scenario, it would also put less pressure on margins and be more favorable on credit spreads for issuers,” Silva says.
“It could be heaven or hell, and that is how investors are seeing the market,” he adds. “If we continue to be on a path in which we see less of a confrontation between the US and the rest of the world, that’s the backdrop that the market wants to see.”
If there is more volatility, however, the biggest sufferers will be issuers with credit ratings in the low to double B levels, Silva says.
Scotiabank’s Tessarotto says large exporters to the United States, such as auto parts manufacturers in Mexico, will likely face the biggest impact from the tariffs.
CHANGE OF STRATEGY
The tariffs have forced many issuers to change strategy by moving quickly when they spot an opening in the bond market.
“What has changed is that the issuance windows are shorter and we need to be more agile,” Santander’s Álvarez-Cañedo says.
“The winners in this market are those that are ready,” he adds. “And that is why we push all of our clients that have any kind of financial need just to be ready, and we monitor the market for them daily to make sure they get to access the right window to minimize the financial cost.”
Scotiabank’s Tessarotto says that issuers may also sell bonds with tenors under 10 years to help build their order books for deals.
“Given that volatility is likely to persist, driven by the current US administration’s style of dealmaking, it could be better to take the available deal today to provide flexibility in case the conditions shift for better or worse,” he adds. LF