Latin Finance - May/June 2012 - 34

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midyear, as the government is taking in more in taxes than expected. It will continue issuing in the local market. The developed world recovery process and

More liquidity on the table: Linares inflation are two important factors that need to be monitored going forward, she adds. Peru has no specific plans for the international market, Linares says, though liability management is possible in the second half of the year. It came out in January to raise $1.1 billion-equivalent through a reopening of its 2031 global sol-denominated bonds and 2050 dollar bonds. Investors put in for more than $7 billion in orders, seizing a relatively rare opportunity – it was Peru’s first sale since 2010 – to play in what has been seen as a less-volatile currency through a global instrument. In the rest of the year, Linares explains Peru should be able to get what it needs in the local market. Following the sale of a new $2 billion 2022 bond in January and a new $2 billion 2044 note in March, Mexico’s medium-term plan is to continue developing its yield curve and diversifying its investor base. Mexico’s 4.75% coupon 32-year bond represented a new low for both Mexican bonds and for LatAm dollardenominated bonds at that portion of the curve. The bond came at a 4.839% yield, and drew about $6.5 billion in orders. “There have been several historical lows on recent deals,” Díaz de León

says. “This illustrates the compression you have seen in yields. It is important to take advantage of these financing opportunities. You can never be too certain about the future.” On a global scale, the US Federal Reserve has communicated that the liquidity is going to be there for quite a while, as long as the US economy continues to perform below potential, Díaz de León says, making liquidity from that part of the world available for a while longer. However, the question is not only about the risk-free asset, but about the risk premiums. Even though interest rates may be low, he says it will be very hard to know what risk premiums will be, and there is still not a clear picture. Díaz de León says Mexico’s external funding strategy for the remainder of 2012 is to be opportunistic, including evaluating the Japanese market with the goal of issuing for the first time without a normal guarantee from the Japan Bank for International Cooperation. It would perhaps look at the Euro market if conditions are favorable. Like many others, Arbeleche sees more local market and liability management transactions for Uruguay, which has prefunded for 2012, though she says a dollar transaction would not be completely ruled out. In March, it issued $800 millionequivalent in domestic peso-denominated and inflation-linked bonds following a two-day exchange process, in a move to continue de-dollarizing its debt. The ministry aims to provide liquidity to its securities which will serve as benchmarks for its local market, in addition to strengthening participation of the Uruguayan treasury in the local market through a deeper issuance. “We priced under our curve in pesos and tightened quite a bit,” Arbeleche says. “We were very surprised on the positive side. Our financing needs are covered for this year and next year.” The operation brought the country’s debt profile to just above 50%, rising rapidly from 11% in 2004. She adds that the sovereign will look to continue at this level. It does not rule out a dollar tap, but the focus will be on the local curve this year, in both peso-denominated and inflation-linked bonds.

Brazil also joined the fray in April, issuing 3 billion reais ($1.6 billion) in global real-denominated bonds. The new 8.50% 2024 came at an 8.60% yield. The transaction received more than 5 billion reais in demand, and was seen as possibly reopening the door for Brazilian corporate borrowers to issue global local currency bonds. The transaction funded a 1.67 billion real repurchase of outstanding 2016 and 2022 bonds, both of which have pricier 12.50% coupons. Others in the region could look to follow, assuming the comfortable conditions hold. Jamaica was meeting investors in April. Not in need of funds, Guatemala was recruiting banks to have a deal ready if an opportunistic moment arrived. Panama, through its Empresa Nacional de Autopista (ENA) was planning a follow-up to last year’s $395 million toll road securitization. A deal of around $650 million would help fund the

Not out of the woods: Díaz purchase of Panama’s Corredor Norte toll road from operator PYCSA. Jamaica was looking at the markets in late April ahead of a possible new bond, with BNP Paribas and Citi. Bolivia was preparing to make a return to the international markets after nearly a century. The sovereign plans a $500 million bond of perhaps 10 years, and has hired Bank of America Merrill Lynch and Goldman Sachs. Tapping the bond market is not a question of needing financing,

34 LatinFinance

May/June 2012

Latin Finance - May/June 2012

Table of Contents for the Digital Edition of Latin Finance - May/June 2012