Bonds were once again the focus of Latin America's capital
markets in 2012, with issuance volumes breaking even the
previous year's records. By year-end, there was a growing
belief that it would be remembered as the year emerging market
debt finally went mainstream - though most notable LatAm
credits have arguably been conventional for some time.
Total cross-border bond issuance from the region in 2012
topped $116 billion, reaching $160 billion with local market
deals included, according to Dealogic.
HSBC is one of three investment banks, with Citi and
JPMorgan, that were at the top of the league tables and can
claim a diverse business across geographies, product types,
currencies and markets.
But ultimately HSBC stands out not only for the range of its
deals currencies, markets and clients - including a presence on
most key transactions across the board - but also for having
led several of the year's most innovative trades, while also
having a formidable pan-regional presence in LatAm's local
In the dollar sector, HSBC had a presence on major trades in
the sovereign, quasi-sovereign, and high-grade corporate
segments. The bank led or co-led several LatAm firsts: a
corporate global depositary note (GDN), an offshore renminbi
(Dim Sum) bond, a covered bond, an Australian dollar issue as
well a ground-breaking tier 1 perpetual.
"The debt capital markets platform gained a lot of momentum
in 2012," says Katia Bouazza, HSBC's co-head of global capital
markets for the Americas. "We brought to the market a lot of
sophisticated deals. HSBC was able to open markets for issuers
so that they could achieve their financing objectives and have
access to an extremely liquid US dollar debt market."
The bank's sovereign deals included Mexico's $2 billion
32-year benchmark bond, which allowed the UMS to reach new lows
for coupon and yield, as well as provide a long-end benchmark
that can be reopened for two more years.
Uruguay's December 2011 23.4 billion peso ($1.28 billion)
dollar-to-peso exchange was a masterful sovereign liability
management operation and a key milestone in the country's
return to investment-grade status.
HSBC also managed Brazil's first real-denominated liability
management exercise in several years and another swap for
Colombia. The bank also led deals for all three LatAm-based
The bank led a 10 and 30-year transaction for
Corporación Nacional del Cobre de Chile (Codelco), its
fifth consecutive transaction for the issuer. The transaction
represented Codelco's largest-ever issue and the lowest yield
and coupon to date by a non-sovereign Latin America issuer for
Other deals for the region's high-grade borrowers include
Petrobras in euros and sterling, Vale, and América
Móvil. A $1.15 billion 10 and 30-year sale from Mexichem
drew 17 times demand in the split-rated space.
"Our global platform allows us to combine local expertise
with global knowledge which gives us the vision to identify
opportunities others might not and drive product innovation,"
says Gerardo Mato, chief executive of global banking for the
HSBC worked on some of the biggest high-yield trades,
including those for OGX and Colombia Telecomunicaciones.
However, this is one area where it has done less business than
the other banks at the top of the overall league tables and is
perhaps the only hole in its armour.
Mato says the bank has started to build its client base to
cater better for frequent issuers and also accommodate a
growing number of high-yield names.
HSBC most stood out in innovative trades in both the dollar
market and in diverse currencies. The bank was among those
chosen for Pemex's GDN offering, the first corporate
transaction that emulates terms of a particular Mexican local
currency-denominated bond and trades, settles and pays in US
dollars. It was the second Latin American GDN issuer after
Peru, in a deal that created a new funding alternative for the
region's corporate borrowers.
Panama's Global Bank promoted HSBC from co-manager to joint
bookrunner in its second - and successful - attempt to bring
Latin America's first covered bond to market in September. The
$200 million 2017 issue generated $500 million in orders from
Other ground broken included the $1 billion junior
subordinated tier 1 perpetual for Banco do Brasil, the region's
first bank bond designed to be Basel III compliant, offering
several flexibilities within the structure to allow for changes
once Brazil's government defines its Basel III rules.
A 1 billion yuan ($120 billion) 2015 bond from
América Móvil was LatAm's first Dim Sum issuance.
That trade and Pemex's A$150 million ($156 million) issue
opened new markets that regional borrowers had long wanted to
Perhaps only Citi and Santander can boast a domestic debt
market reach matching that of HSBC. In a September reopening of
the Mexican road securitization market, Red de Carreteras de
Occidente's (RCO) 8.12 billion peso ($624 million) transaction
was the first deal of its type in nearly a year. The 930
million real ($508 million) Driver Brasil One Fundo de
Investimento em Direitos Creditórios (FIDC) transaction
in April broke new ground for ABS deals in Brazil, with
features including the first pass-through amortization
"We have had a busy last quarter and a strong pipeline,"
Bouazza says. "We will continue to see an issuance trend in
dollars and local currencies and expect the low rate
environment to continue for now. In terms of spreads, there has
been a bit of a pushback from investors given that yields are
reaching very low levels, but appetite remains solid and deals
have been well received." LF