LatAm issuers raise funds as primary market enters 'final window of opportunity' of 2023

News Analysis 3 November

LatAm issuers raise funds as primary market enters 'final window of opportunity' of 2023

by Alvaro Ledgard

Three issuers raised just over USD 2bn in the Latin American primary market this week as they tried to squeeze in deals on the back of the US Federal Reserve's announcement on 1 November that it would hold rates. 

"We saw the best market conditions of the past three to four weeks after the Fed announcement," said a DCM banker. 

"Activity was high because of a perception that central banks have reached a peak in terms of their interest rates," the banker added. 

The transactions this week meant that LatAm issuers accounted for USD 5.87bn in October, from six tranches, according to Debtwire data. The 2023 total now stands at USD 66.24bn from 67 tranches, including USD 27.25bn from 30 high-yield and split-rated issuers. Borrowers accounted for USD 45.48bn from 55 tranches in the corresponding period of 2022, including USD 17.87bn from 24 high-yield credits.

The current levels of activity seen in the primary market this week are expected to carry over into next week before possibly entering a lull until early 2024, said the banker. 

"There's not a lot of relevant economic data coming out next week so there's a chance for borrowers to act between Monday and Friday. Then you have inflation data coming out on the 14th, then Thanksgiving and then we're too close to the next FOMC meeting. It's now or never for borrowers," the banker said. 

Grupo Bimbo (BBB+/Baa1/BBB+) kicked off the week by raising USD 1bn in a two-part deal. The Mexican food products company priced a new USD 450m 2029 bond at 99.957 with a 6.050% coupon to yield 6.054% or UST+ 125bps, and a new USD 550m 2034 bond at 99.758 with a 6.4% coupon to yield 6.429%, or UST+ 155bps.

The company managed to tighten pricing from the initial price thoughts it had set earlier that day of UST+ 145bps-area for the 2029 notes and UST+ 175bps-area for the 2034 bond. 

BBVA, BofA, Citi and Morgan Stanley managed as active joint bookrunners, while Rabo Securities was co-manager. 

The new 2029 notes last traded today, 3 November, at 101.87 to yield 5.624%, according to MarketAxess. The 2034 notes last traded at 103.669 to yield 5.904%. 

The primary also saw activity on the sovereign front, as Jamaica (B1/BB-/B+) priced a new JMD 46.6bn (USD 300m) JMD-linked 2030 bond at 99.375 with a 9.625% coupon to yield 9.75%. 

The sovereign had set initial price thoughts of high-9% the day before pricing, after holding fixed-income investor meetings in London and New York from 23 October to 26 October. 

Citi managed as global coordinator and was joint bookrunner alongside BofA. 

Jamaica's USD 1.26bn 6.750% 2028 bond last traded 31 October at 102.420. 

Sociedad Quimica y Minera de Chile (SQM) closed the week by pricing a new USD 750m 2033 green bond at 99.421 with a 6.5% coupon to yield 6.58%, or UST+ 190bps. 

The Chilean miner had set initial price thoughts of low-UST+ 200bps earlier that day, and had been on the road ahead of the deal from 30 October to 1 November. 

BofA, Santander and JPMorgan managed as joint bookrunners. 

The new notes last traded 99.9 to yield 6.514%. 

As the final window of the year draws to a close, deals that were kept on the back burner could emerge next week. 

One of those could be Costa Rica (B+/B2/BB-). The country selected JPMorgan and BofA to provide bookrunning services for an upcoming international bond issuance back in early October. 

"On the sovereign front, Colombia and Brazil are also candidates to come out with a transaction next week," according to the banker. 

Grupo Energia Bogota was rated BBB by Fitch for a proposed senior unsecured 2033 bond of up to USD 400m.

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