THE OUTLOOK IS bright for Latin American issuers. Borrowing costs for the top issuers have remained stable at historical lows, supported by modest sovereign debt levels, a robust growth outlook and loose monetary policy across the developed world.
The markets have also been in a forgiving mood: credit default swaps on the Peruvian sovereign flared out following the election of leftist president Ollanta Humala in June but are now trading virtually where they were at the beginning of the year. With the exception of Venezuela, Argentina and El Salvador, CDS spreads on every Latin American borrower are now trading inside 200 basis points. For a continent that was once as synonymous with sovereign debt crises as the eurozone has become, that’s some achievement.
But risks remain on the horizon: the prospect of a disorderly default in the eurozone has dampened investor appetite for emerging-market risk a number of...
