LatinFinance - May/June 2014 - 6

NEWS
BONDS

Sovereigns and quasi-sovereigns took advantage of surging
appetite. Corporates also jumped into the issuance spree, seeing
strong demand and ample liquidity. By Eduardo García

Bonds surge, splutter
the bond market returned to
life in march and april after a
dormant, volatile february.
mexican lender Crédito Real
kicked off the party in early
march, drawing $2.25 billion
of orders for a $350 million
bond - a sure sign of pent-up
demand. investors were so
eager for the credit that the
borrower went in for a second
serving in mid-march, raising
a further $75 million at a yield
25bps tighter than when it first
sold the instrument.
the market soon heated
up. Brazil's Banco Daycoval,
caribbean telco Columbus
International and Peruvian
power line operator Abengoa
Transmisión Sur priced deals
in march, before things went
into full swing in april, when
borrowers sold over two dozen
bonds and executed eight
liability management exercises.
Sovereigns and quasi
sovereigns particularly shone.
Mexico cemented its position
as a top emerging markets
destination when it raised
£1 billion in mid-march from
the sale of a 100-year bond,
only the second ever bond to
have been sold in sterling at
that maturity. the deal was
one of two-ultra long bonds
in the period: Brazilian food
producer Minerva brought a
$300 million 8.75% perpetual
instrument. the following
month, mexico was back for
more, raising €2 billion ($2.75
billion) in 2021s and 2029s in
a transaction said to be more

than three-times subscribed.
Brazilians continued
accessing the market, showing
investors are keen on the
country despite pessimism
over its current account and
volatility ahead of the october
election. Petrobras sold an
$8.5 billion bond in march, a
six-tranche deal that was the
largest so far this year. orders
were said to total around $23
billion.
meanwhile, the Brazilian
sovereign brushed off an
S&P downgrade to BBB- to
sell a €1 billion 2021 bond in
late march, pushing pricing
tight thanks to €2.7 billion in
orders. "Sentiment toward
Brazil has improved after the
rating downgrade, which was
expected, and because it was
put on stable outlook and the
other two rating agencies also
have a stable outlook for the
country," a european investor
said at the time. Brazilian
state development bank
BNDES also underscored that
sentiment, selling a $1.5 billion
bond, riding strong demand
from fund managers, while
Banco do Brasil raised €300
million in late march on the
back of around €750 million in
demand.
Several companies took
advantage of high investor
appetite to buy back debt,
including Crédito Real,
Digicel, Cemex, YPF,
Gerdau, Telemovil and
Votorantim Cimentos.
meanwhile, a steady supply

DCM rank by volume, year to April 25, 2014
HSBC and JPMorgan fight for the top
Rank

Bookrunner

1
2
3
4
5
6
7
8
9
10

Value $m

HSBC
JPMorgan
Deutsche Bank
Santander
BofA Merrill Lynch
Credit Suisse
Citi
Bradesco BBI
Goldman Sachs
Banco do Brasil SA

6,751
6,583
4,936
4,889
4,632
4,436
4,407
3,540
3,475
3,430

93

Source: Dealogic

of corporate debt kept the
market turning over at pace.
investors piled into Cemex's
dual-tranche bond sale in late
march, pushing the cement
company to increase the size
of its euro offering to €400
million at the same time as it
sold a $1 billion bond. mexico's
Alfa printed a heavilysubscribed $1 billion bond
that same week, while Pemex
sold a €1 billion ($1.3 billion)
2026 bond in early april,
consolidating its position
as latam's second-largest
corporate issuer in the foreign
markets, after Petrobras, so
far this year.
Still, by late april, signals
that the market may be
reaching an inflection point
were creeping in. ongoing
troubles in Russia and the
Ukraine distracted emerging
market investors' attention
away from latin america,

and some momentum left the
market.
Some deals struggled.
Peruvian developer Los
Portales (B+, fitch) roadshowed
in april and was heard to start
marketing a bond but did not
close the deal. later in the
month Brazil's Paranapanema
(Ba3/B+) was heard to postpone
a five-year non-call three bond
sale, which had been talked
in the high 8% range. the
Dominican Republic sparkled
with a $1.25 billion 30-year bond
- but had to step back from a
touted local currency tranche.
the rest of the year could
be confined to short bursts of
market activity between periods
of closure, says Ricardo navarro,
itaú's head of latam Dcm. the
next big opportunity could
come in June or July, as potential
issuers anticipate the end of
quantitative easing, he says. LF
 

6 l atinfina nce.com - May/June 2014

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14
8
9

65,058

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# Deals
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