Debt market conditions sour
After a period of solid bond issuance, the backdrop has challenged high-yield sales in particular
The US government shutdown appears to be causing problems
for LatAm debt issuers, especially those high-yield issuers hoping to jump
through the window that opened up last month. The US Federal Reserve’s delay in
QE tapering paved the way for Mexico,
Andina and others to sell bonds in the cross-border market. However,
lesser-known, lower-rated credits have run into problems this week.
Credito Real postponed
a new bond sale. In what would have been its second international bond, the
Mexican lender was looking for a $300m 2018 note.
its tender offer open an extra day, with the market still awaiting Wednesday
morning the status of a new 2025 to fund it.
Mexican marine contractor Oceanografia surprised with the pricing
of a $160m bond Tuesday, after appearing to give up on a deal last week.
However, it got only about half the amount it originally targeted.
Brazilian high-yield sugar and ethanol credit Biosev is the
lone LatAm issuer on
the road looking to test the markets.
“A short term partial [US government] shutdown will have
minimal to zero impact on the economy with that impact increasingly in a direct
relationship with time,” Bulltick says. The bank expects the impending deadline
on the debt ceiling — more grave than a short-term government shutdown — will
force the government to reopen.
Next week LatAm issuers will begin to get a sense of whether
the equity markets will remain open. Mexican real estate plays Grupo
Hotelero Santa Fe and Fibra
Danhos are scheduled to price IPOs Tuesday. In Brazil, Tupy
will hold a follow-on and Ser
Educacional will price an IPO the following week.