LatinFinance - September/October 2015 - 8

NEWS
BONDS

Hopes build for the new issue market in September and October, after a
quiet spell in August. By Patrick Ferguson

Great expectations
Uncertainty over a potential
US rate hike in late August
continued to keep borrowers,
investors and bankers on
guard as they prepared for a
flurry of transactions slated for
September. Major swings in
China's stock market in August
had lowered the expectations
of some regarding a move
by the US Federal Reserve,
however, and borrowers were
lining up roadshows to be
ready for any window that
popped up.
Indeed, investors and DCM
sources said the market had
already priced in a rate hike
for September - meaning that
LatAm borrowers would be
tempted to hit the market if
there is a rally on a decision by
the Fed to hold.
The optimism for
September came after a
slow couple of months, with
new issue markets in July
and August deadened by
uncertainty in Greece and
Brazil, sharp declines in
Chinese stocks and summer
vacations.
Still, Peru found a window
to issue a $1.25 billion 12-year
bond in the third week of
August. Investors and bankers
said the bond sale was a
surprise and that they had
not been expecting issuers
to come to the market before
September.
"We knew there is going to
be a large amount of liquidity
coming into the market after
the summer, but we had the

issue with interest rates with
the Fed," Carlos Blanco, Peru's
new head of public credit, told
LatinFinance after the deal was
executed.
"It was brave to jump in the
water," said one debt capital
markets banker of Peru.
Peru and its bookrunners
Citi and JPMorgan proved
to have impeccable timing,
coming to market just days
before China's Shanghai
composite index plummeted
8.5%, sending stocks spiraling
down across the globe and
all but freezing trading in the
LatAm bond market.
The A3/BBB+/BBB+
sovereign, on the back of
$5 billion in orders, pulled
pricing in by 30 basis points
from initial price thoughts.
Investors from Asia, Europe,
Latin America and the US
bought the paper, Blanco said.
The proceeds will prefund
obligations due next year, he
added.

Island issuers

Caribbean issuers also took
advantage of markets in July
and August. Barbados-based
Sagicor sold an 8.875% $320
million 2022 non-call four
bond, while Jamaica found
investors for a $2 billion
dual-tranche note. The
Caribbean sovereign plans
to use proceeds to pay back
Venezuela's PDVSA, under the
Petrocaribe accord.
Sable International Finance,
the financing arm of Ba2/

8 L ATINFINA NCE.COM - September/October 2015

DCM rank by volume, year to August 28
US banks lead the pack
Rank
1
2
3
4
5
6
7
8
9
10

Bookrunner
Citi
BofA-Merrill
Santander
HSBC
Morgan Stanley
JPMorgan
Deutsche Bank
BBVA
Credit Suisse
Itaú BBA
Total

Value ($m)
10,417
9,915
9,687
8,563
7,334
6,837
6,633
5,583
4,445
3,908

# Deals
59
39
45
43
19
21
24
40
14
35

94,645

238

Source: Dealogic

BB- rated Cable & Wireless
Communications, also issued
a 6.875% $750 million 2022
non-call three note.
Yet for most of the summer,
uncertainty over Greece's
bailout talks, China's market
crash, speculation over the
Fed's next move and issues
closer to home stalled Latin
America issuances. Another
series of senior arrests at
Brazilian companies in

For daily updates on
the bond market, visit:
latinfinance.com

connection with the Lava Jato
corruption case threw Brazilian
markets back into turmoil.
The volatility caused some
to step back from the market.
Among them, Brazil's Cosan,
which went on the road in June,
was heard to postpone its bond
in July. And after Chile's mining
ministry said the Codelco
would tap the dollar market,
the Chilean miner went off the
radar. LF

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Table of Contents for the Digital Edition of LatinFinance - September/October 2015
