Swiss franc bonds: Taking comfort

Jun 28, 2013

With US rates poised to rise, Latin borrowers are turning to Swiss francs in record numbers

The first weeks of June were not a friendly period for LatAm debt issuers in the dollar market. US Treasury yields jumped on fears that ultra-low rates in the US were coming to an end, repricing curves for dollar issuers and forcing borrowers to put deals on ice.

The 125 million Swiss francs raised by Banco Santander Brasil and the 225 million Swiss francs raised by Banco de Chile in those weeks did not set any records for size. But they demonstrated a funding option that is still open for a growing number of Latin issuers. Latin borrowers have sold more than $1 billion annually in Swiss francs since 2010, after just a trickle in the years before.

This year is shaping up to be a record-breaker. LatAm borrowers raised a record $1.57 billion-equivalent from nine Swiss franc deals this year through June 11, according to Dealogic. That outstrips the...

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

Jan Dehn, Ashmore Investment Management