DEBT: Jumbo Train
Jul 1, 2009
A decline in EM risk perception has seen bond prices rally and a steady stream of new issuance from LatAm. The list of potential followers is long, but as of mid-June it appeared few were ready to jump before the summer hiatus. There is still a big question as to whether anything but blue chips could issue.
“At the upper end of the credit spectrum, the issuance will pick up, and as long as they are well-priced, [deals] will do very well,” says Luz Padilla, group managing director for EM debt at TCW, which handles $1.5 billion in the asset class. She says larger issuers that have issued so far were typically very strong names at good concessions, pleasing the buyside. The BB and B space will be more difficult, she says.
As of mid-June, it was the lower rated credits awaiting their turn. Brazilian utilities Eletrobras, Cemig and CPFL joined a queue already containing the likes of Colombia’s EPM and Ecopetrol.
In the meantime, quasi-sovereigns dominated, with large over-subscribed offerings that highlight pent up demand for the right names. The 10-year tenor appears to be a sweet spot, and preparing investors for “benchmark” size is the rule of thumb. ...
Already have an account?
Subscribe
Subscribe now for unlimited access to all current and archive news, data and market analysis.
Subscribe
Free trial
Take a free two-week trial now for the latest news, data and market analysis.
Free Trial