Latin Finance - March/April 2012 - 30

public credit scorecard

Savvy Sovereigns
by Ben Miller

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aming the top public credit issuer in LatAm this year is difficult, with the region spoiled for choice. Any of this year’s regional top seven would be a superstar in Europe, and in many other parts of the world. Strong management, timely liability exchanges, and almostguaranteed strong demand from investors for paper at historical low yields mean any of them could make a case for being number one. The past 12 months for Mexico have mostly seen a series of well-timed retaps, most notably surprising the markets with a $1 billion reopening of its century bond in August. The somewhat unconventionally timed deal locked in a 5.959% yield, or 241.8 basis points over US Treasuries, some 14 basis points inside the original 6.10% yield. A fast and efficient execution, helped by accumulating some anchor orders beforehand, was the key to pricing at a time when markets were particularly sensitive to Europe’s debt problems, S&P’s downgrade in the US, and a selloff in the equity markets. Despite this, demand for the 2110 hit $2 billion. Mexico also reopened its 2020 in February of 2011 and followed with a retap of its 2040 in April. It was the first issuer out of the gate this year, with a $2 billion 2022, and continues to hold its domestic syndicated MBono auctions, drawing in international buyers with more ease than any other issuer in the region. Uruguay has always punched above its size in the credit management arena, and broke new ground in the past year. May saw a return to the Samurai bond market, to raise ¥40 billion ($493 million) with a 10-year bond that drew 2.2 times demand. A December exchange offer resulted in a new $2 billion 2028 bond and a $725 million-equivalent inflation-linked bond that replaced expensive peso, euro and

Perennial star issuer Mexico leads the rankings in a region where most sovereign public credit departments receive top marks. Uruguay follows closely behind.
dollar debt. Uruguay was rewarded in January with a ratings upgrade that has it just one step away from investment grade with all three agencies. Colombia began this year with a $1.5 billion reopening of its 2041 benchmark. Proceeds funded a liability management operation that saw it remove four series of more expensive debt. This operation to pay for the cash portion of a liability management operation designed to retire 2015 dollar bonds. It had also offered holders reopened 2036 dollar bonds. The markets were also encouraged by the fact that the country’s team of public credit experts remained in place during a political spat that saw the finance minister resign. The investment-grade issuer 2012 Public Credit Scorecard made its Japanese debut a year Mexico leads strong top seven earlier with a ¥41.5 billion ($502 million) 10-year offering, which Country Highlights according to officials at the time 1 Mexico Century Retap would save the country $100 million 2 Uruguay Multi-currency liability management over the life of the bond thanks to the low 1.81% coupon. 3 Colombia New 10-year benchmark Brazil and Chile have also 4 Peru Dual-currency issue received top marks for debt issuance, 5 Panama Samurai, liability management even though 2011 was less active and innovative than years past. Yet, 6 Chile New 10-year, peso tap for sovereigns that already have 7 Brazil Benchmark reopenings strong debt dynamics, a conservative Source: LatinFinance approach is seen as positive, especially for investors unnerved by the fiscal mismanagement of peripheral followed a new $2 billion 10-year bond European countries. issued in the middle of last year. The region’s highest-rated issuer While many sovereigns have taken a break from global local-currency issuance, can always count on investor interest and LatAm’s tightest spreads. This was Peru maintained this trend with a dualthe case when Chile reopened its pesocurrency issuance in January. denominated 2020s for $325 million After spending 2011 on the sidelines, equivalent and issued a new $1 billion the sovereign raised $600 million10-year in August. equivalent in a reopening of pesoBrazil continued to be one of the denominated 2031 and $500 million in a region’s model issuers, sticking to its retap of the 2050 bond. strategy of building benchmarks through Panama is another ministry pushing opportunistic taps. It reopened its 2021 to replace expensive debt with local bond for $500 million in July, and its 2041 issuance. In January, it raised $200 for $1 billion in November. LF million through a domestic bond auction

30 LatinFinance

March/April 2012
Latin Finance - March/April 2012

Table of Contents for the Digital Edition of Latin Finance - March/April 2012
