DEBT: Local Market Steps Up

Jul 1, 2010

European sovereign troubles have shut the door on LatAm companies hoping to issue bonds overseas, though local markets offer some relief.

A permanent solution to debt problems in the euro zone are far off, and since Latin issuers generally have no urgent need for cash, they are waiting for volatility to subside.

"We’re happy with [EM] fundamentals, we’re worried about technicals," says Esther Chan, who helps manage $5 billion in EM bonds at Aberdeen Asset Management. However, continued volatility and threat of more downside limit the risk investors can swallow. Chan says continued inflows over the next few months would revive investor appetite for EM.

High-quality issuers in Latin America’s local markets have still been able to raise funds. Pemex continued in a quest to single-handedly account for 2010 Mexican DCM volume, with a 15 billion peso deal priced tighter than initial expectations. In May, it sold 8.5 billion pesos in 2014...

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“The crisis has been a setback for reserve diversification."

Jan Dehn, Ashmore Investment Management