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LatAm bond sales surge to record

Jul 7, 2014

Citi, HSBC lead league tables as debt capital markets activity swells in the first half of 2014

New issues from Latin America reached their greatest volume on record in the first half, according to data from Dealogic.

Latin American issuers sold $102.2bn of bonds in local and international markets between January and June, some 23% higher than the same period in 2013, the data shows.

The surge comes as borrowers take advantage of low borrowing costs — as quantitative easing continues from global central banks — to sell new bonds and refinance outstanding debt with liability management exercises.

Sovereigns Ecuador and Jamaica, which both recently restructured their debt, have caught particular attention with large bond sales.

The region’s international bond sales also reached a half-year record in the first six months of 2014 to reach $85.5bn, beating the previous record established in the second half of 2013 by nearly $20bn.

At $631m, the average deal size was also the highest on record, Dealogic said.

Citi led the LatAm bond league tables with a 10.9% market share, while HSBC came on top for cross-border deals, with an 11.6% market share, the Dealogic data showed.

Katia Bouazza, HSBC’s co-head of global capital markets for the Americas, said the market had been unexpectedly busy in recent weeks, despite expectations of a decrease during the soccer World Cup. The market may take a breather during the summer, she said.

"It may slow down because we had weeks when we had, four, five, six deals at a time," she told LatinFinance.

However, strong demand for recent deals, including Codelco’s €600m euro debut last week, show that bond deals will continue, she said.

Strong liquidity and a search for yield among investors in recent weeks has allowed DCM bankers to squeeze in prices well below guidance, and companies to borrow more than their targets.

Deals paid an average spread of 243bp over the benchmark in the first half of the year. That was down 64bp from the second half of 2013, is the lowest since the last six months of 2007, when it recorded 194bp, Dealogic said. LF



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