LatAm bond markets: Currencies’ depreciation will test local appetite

International investors are increasingly looking at Latin America’s local currency markets, but foreign exchange volatility makes the buyside wary of losing any potential gains, as has happened with some recent deals. The mixture of currency and credit risk may be too heady a cocktail for some.

Last year investors feasted on Latin American credits in the international markets. A record volume of $185.2 billion was issued, beating the previous year’s record by 9%. The average deal size also set a new record, up 23% to $453 million. That was all seemingly great news for companies, bankers and investors, but there was a sting in the tail: fourth quarter issuance fell to $30.4 billion – the lowest quarterly volume since the second quarter of 2012.

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