Latin America: Ten months good, two months bad...

Latin American borrowers who took advantage of the tight spreads and long tenors available during most of 1997 have cause for satisfaction. In the wake of fourth-quarter bond-market volatility, doubts have been raised about their level of access to international capital markets in the next year.

Before the Asian-induced October upheavals, it had been a year of steadily tightening spreads and lengthening tenors, with most deals heavily oversubscribed in spite of a record supply coming onto the market. Landmarks included Chilean utility Endesa's century bond, the first from a Latin company. However issuance all but dried up in November, and in secondary-market trading spreads on Latin bonds have widened out by between 200 and 300 basis points on many issues.

Not surprisingly, money managers have been adopting a wait-and-see attitude, preferring to engage in a little secondary-market trading in order to tidy up their...