January 15, 2016 |
High levels of liquidity among lenders may keep margins from widening in the Latin American syndicated loan and project finance markets in 2016. Yet at the same time, credit risk is rising, suggesting borrowing costs in the loan market may not tighten, either. Bankers say relationships are being put to the test, especially with the expectation that commodity-related borrowers, which are struggling with falling revenues, will try to refinance short-term debt.
Lenders are likely to look at deals on a case by case basis, sources say, although borrowers interested in tenors less than five years are likely to find more attractive funding costs from bank lenders than in the bond markets.
As bank lenders remain liquid and corporate creditworthiness weakens, the direction of pricing in the LatAm loan market is up for debate