Latin American wave of US $ 50bn emissions has just begun

(Bloomberg) – International bond issuance in Latin America is advancing at its fastest pace since 2017 with no slowdown in sight, as borrowers rush to lock in rates before they go much higher.

“We’re going to start to see a substantial rebound in issuance,” said Max Volkov, head of debt capital markets for Latin America at Bank of America Corp., in an interview. “April and May are likely to be more active this year than in previous years, as interest rates are going to go up.”

Governments and corporations have borrowed about $ 50.4 billion this year, excluding local issuance, according to data compiled by Bloomberg. It’s the most since 2017, when $ 57.2 billion was raised in the same period. Mexico returned to the dollar bond market for the second time this year on Tuesday, raising $ 2.5 billion in 20-year debt. The agreement opens the doors for other issuers in the region, Volkov said.

Bank of America, the fifth largest international bond underwriter in Latin America this year, worked on the sale in Mexico.

After starting the year at a fast pace, the volume of Latin American bonds declined last month due to rate volatility, which has since declined. Issuers that chose to wait for March to pass are preparing to strike deals in April and May, Volkov said.

Chile, Peru and Panama are among investment grade countries that could sell bonds, according to Deutsche Bank AG’s Jake Gearhart. Chile last week placed a sustainable Formosa bond for US $ 1.5 billion maturing in 2053.

“Are additional issuance plans going to accelerate in the second quarter?” Gearhart asked in an interview Wednesday, referring to Latin American borrowers. “There are many good reasons to try if we think rates are going up, and we think many issuers and investors are convinced of that.”

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Other types of issuers in the region could do the same.

“With sovereigns opening the doors to new issues, we will start to see placements from corporations and financial institutions,” Volkov said.

The primary market is also receptive to issuers rated just below investment grade, including first-time borrowers. Deutsche Bank has “a handful” of high-yield deals in its portfolio, Gearhart said.

“The global high yield debt market is quite strong and we are very comfortable about the outlook for debuting borrowers,” Gearhart said. Deutsche Bank ranks 11th in terms of volume in terms of bond underwriting in the region, according to data compiled by Bloomberg.

Original Note: Latin America’s $ 50 Billion Borrowing Spree Just Getting Started

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