Borrowers from Latin America have sold
$1.57 billion worth of debt in Swiss francs this year, a record
total reached before the year is even half finished, according
to Dealogic. The run of issuance is providing solace to
high-grade borrowers who have found themselves locked out of
the dollar market as investors flee emerging market assets.
Banco de Chile was the most recent borrower to hit the Swiss
market, selling a 225 million Swiss franc ($243 million) on
June 11. That followed the
125 million Swiss franc bond sold by Banco Santander Brasil
on June 3 in a diversification bid that also pulled in
attractive pricing – the bank priced through its own
"Equities were a bit negative, but we have
seen a strong Swiss franc market over the past weeks and
decided to go ahead with a transaction," Alvaro Carbajosa,
Santander Brasil’s head of international funding,
said at the time of his bank’s deal.
Well-rated Latin borrowers are finding a
ready investor base for transactions in Swiss francs.
Volatility in US interest rates has pushed investors to offload
dollar denominated bonds, particularly those from emerging
Investors yanked $1.52 billion from
emerging market debt funds and $3.99 billion from EM equity
funds in the week to June 5, according to EPFR
. Outflows from EM hard currency funds were the highest since
the second quarter of 2007, according to EPFR. Cash left
local currency funds for the first time since the third quarter
"The Swiss franc market tends to be less
volatile than others," says Dominique Kunz, managing director
and head of Swiss DCM at Credit Suisse, which managed the
Santander Brasil sale. "And it plays in our favor most times,
though sometimes not."
América Móvil in May clinched the lowest yet
coupon for a LatAm issuer in the Swiss market, and likely
the tightest-ever spread, in its fourth Swiss sale. The telecom
reopened its 1.125%-coupon bond to yield 0.917%, or mid-swaps
plus 47 basis points.
"If you want to issue five-year paper [for
us] nothing would beat Switzerland," América
Móvil CFO Carlos García Moreno says. He adds that
five to six years is most efficient spot on the curve, with no
value beyond that. This is due to the large presence of retail
Other issuers this year have included
Santander Chile, Corporación Andina de Fomento (CAF) and
the Central American Bank for Economic Integration (Cabei).
Look out for in-depth discussion of the opportunities
for Latin borrowers in the Swiss franc market in the July
edition of LatinFinance magazine – online
from June 28.