The US Federal Reserve’s decision to leave rates untouched on Thursday could tempt high-grade LatAm issuers into the bond market, sources have told LatinFinance.
Mexican real estate trusts Fibra Uno and Terrafina are likely looking for windows to issue, said one banker. If they have sufficient demand already, they could bring deals as soon as today – even though bond deals are rarely launched on Fridays, he said: “If not, I’m sure next week would work just fine.”
“The market is attractive, rates are low, [Investors] still have money, not a whole lot, but they still have money, so you should take it,” said another bond market source. “If they had hiked rates and gave a signal that they were going to go even further, you would have a tougher time getting a deal done.”
Still, the pipeline is slim. Fibra Uno and Fibra Terrafina finished roadshows last week and are expected to seek dollars bond. Meanwhile, Argentina’s state of Neuquén and the Panama Canal Authority are on the road until Monday. And Gol, a Brazilian budget airliner, is meeting with investors in the US and London next week.
The US Federal Reserve kept its target interest rate between 0% and 0.25% on Thursday. Chairwoman Janet Yellen said that lower prices on energy and non-energy imports have depressed inflation, although the US economy has improved and unemployment levels have decreased. Recent turmoil in financial markets, namely sells off in Chinese stocks, have added to market volatility and have put downward pressure on inflation, albeit temporarily, Yellen added.
Yields of US Treasuries two-year notes closed on Thursday at 0.70%, down from a four-year high of 0.82% reached on Wednesday. Yields on the 10-year notes closed at 2.21%. LF