Argentina bond sale spurs LatAm deal flow

Argentina bond sale spurs LatAm deal flow

Argentina Colombia Mexico Central America Caribbean Bonds

Latin American debt capital market bankers enjoyed an uptick in new issues this week, on the back of positive investor sentiment generated by Argentina’s $16.5bn bond deal.

Bankers priced $2.75bn in new issues after the Argentine deal, while the Inter-American Investment Corporation completed a $500m Reg S eurobond last month.

Banco Nacional de Costa Rica sold a 5.78% $500m 2021 green bond. Mexican food processor Sigma Alimentos sold a $1bn 2026 bond, while Colombia’s Gruposura Finance upsized a $550m 2026 bond and Guatemala rounded out a flurry of deals last week with a $700m 10-year deal, its first since February 2013.

Sura and Sigma unlocked some momentum for Latin American corporate cross-border bond issuers. The order book for Sura’s issue swelled to almost $3bn, sources said, while Sigma accumulated up to $3.5bn in orders. Investor demand for emerging market credits is increasing, one investor said.

Improved investor sentiment led Mexican cement maker Cemex to launch a tender offer last week to buy back three bonds. Cemex is aiming to buy back its 2018 floating rate notes, its 6.5% 2019s and up to $150m of its 9.375% 2022s.

Sura’s $550m 2026 bond was the first Colombian corporate issuer to tap the cross-border markets. Bookrunners Bank of America-Merrill Lynch and JPMorgan deemed investor appetite enough to increase the deal by $10m.

The Guatemalan trade was perceived as "fantastic" by one investor, who thought other emerging market sovereign issuers should look to this bond as a yardstick for future issues.

Guatemala obtained yield of 4.6%, at a time when spreads on emerging market credits have come in a lot in the last two weeks. Sovereigns with large funding needs may be well served in tapping markets during this window, the investor said.

Other corporate issuers set to tap the bond markets in May include AES Dominicana and Banco de Bogota.

Argentine provinces are set to tap the cross-border bond market in the next two weeks. Neuquen province has mandated Deutsche Bank and JPMorgan to conduct investor meetings next week for a new bond sale and debt exchange offer on its 2021 notes.

The province of Chubut is also preparing to issue an $83m cross-border bond due in 2023, according to Moody's. The agency has given the bond a B3 rating.