Lending activity in Latin America is expected to pick up in the third quarter of 2025, led by demand from corporates for alternative sources financing in the face of a volatile bond market.
“We’re expecting a busy third quarter,” says Felipe Suárez, head of loan structuring and syndications at Panama-based Banco Latinoamericano de Comercio Exterior.
Bladex, as the bank is known, expects to close deals in five to six countries, including Ecuador, El Salvador and Peru, he adds.
There are two drivers of this expected pickup. The first is that banks across the region will seek to expand their loan portfolios, and the second is that corporates will turn to the banks to help them finance acquisitions.
“We expect to fund an M&A transaction in the third quarter in Panama and do some refinancing and extending of maturities for a power energy company in Peru and a telecom company in Central America,” Suárez says.
The increase would come on the back of a slowdown in the first half of this year. The total volume of syndicated loans amounted to nearly $22 billion from 46 transactions in the year through June 15, down 1.7 times from the $45.8 billion from 77 deals in the same period of 2024, according to data from LSEG.
A slump
Latin American and Caribbean syndicated loan volumes by year, January 1 to June 15
| Closing Date | Tranche Amount (USD Millions) | Number of Issues |
| 2023-01-01 – 2023-06-15 | 25,763.59 | 56 |
| 2024-01-01 – 2024-06-15 | 45,804.61 | 77 |
| 2025-01-01 – 2025-06-15 | 21,957.34 | 46 |
According to Suárez, the main reason for the decline in the first half was the stubbornly high interest rates. While the benchmark secured overnight finance rate has dropped to around 4.3% this year from a peak of 5.4% in 2024, it is still excessive.
“The rates have been high and the clients were expecting some reduction in margins to go out to the market, but that hasn’t really happened,” Suárez says.
He adds that borrowers will be moving ahead with their financing plans instead of waiting for rates to drop.
In the first half, Suriname’s state-owned oil company Staatsolie led the pack of borrowers with a $1.73 billion syndicated loan in May to refinance existing debt and fund its 20% working interest in an offshore drilling project. Bladex and Africa Export-Import Bank arranged the deal, with another 17 local and international banks participating.
A big deal in the works is in Argentina. VMOS, a consortium of oil companies led by Argentina’s state-run oil company YPF, expects to borrow $1.7 billion from a syndicate of five international banks to help finance a $3 billion oil pipeline and export project in the country.
“We’re seeing lots of activity in Argentina,” Suárez says. “We expect more transactions to come.”
Elsewhere, activity is expected to grow in Chile and Peru. Chilean forestry firm Celulosa Arauco y Constitución and Engie Energía Perú, a unit of the French energy company Engie, have requested multilateral banks to arrange deals totaling up to $1.6 billion to finance, respectively, a wood pulp plant in Brazil and renewable energy projects in Peru.
A MEXICAN SLUMP
In Mexico, however, lending activity has slumped.
“Most of the new transactions in Mexico are basically refinancing existing debt and no new investments,” Suárez says.
According to Fitch Ratings, Mexico’s business environment, already reeling from issues associated with a judicial reform, has weakened because of a surge in uncertainty around tariffs. US President Donald Trump’s April 2 announcement of tariffs on much of the world has hit Mexico hard, given that its main export market and source of investment is the United States. And with the tariffs causing inflationary pressures and preventing the US Federal Reserve from cutting the benchmark for interest rates, this is delaying investment and M&A plans in Mexico.
“Mexican banks will face top-line pressure and margin compression due to their negative rating sensitivity to lower rates and increased credit costs,” Fitch said in a recent report.
The credit ratings agency added that the situation is “especially true for small to midsized banks whose lower capital bases and less diversified business models are prone to be more sensitive to industries vulnerable to increased US tariffs.”
OUT IN FRONT
In terms of sectors, bankers say that demand for loans has been on the rise from the oil and gas, mining and telecommunications sectors. More are turning to the loan market given the challenges in selling bonds at reasonable rates. This is making it more attractive to do a five-year syndicated deal with a floating rate, allowing them to benefit from future rate decreases.
One of these borrowers could be Ecopetrol, the state oil company of Colombia. In May, the company said it plans to borrow from local or international banks to refinance bonds and fund investments instead of tapping the bond market.
“In terms of uncertainty and high volatility in the bond market, the loan market remains a more reliable option, at least until interest rates come down,” Suarez says. LF