Latin American DCM: Now comes the hard part
Latin American issuance was solid, if unspectacular in the first half of this year. However, with politics, sticker price resistance and refinancing needs skewed to 2024, the next half may be more difficult.
The Ps22 billion ($1.2 billion) America Movil local-currency bond – underwritten by BBVA, Citigroup, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and Santander that the firm sold on June 27 – exhibited many of the trends seen in Latin America's debt capital markets this year.
It was local currency – clearly a theme when around $13 billion-equivalent was issued from Latin American issuers in the international markets in the first half of this year.
It was over-subscribed – and saw solid ‘traditional’ execution, where the underwriters tightened primary pricing throughout the marketing phase, and it continued to narrow in the secondary market.
It was a Mexican issuance – the US neighbour being the standout performer from the region.
And, of course, it had a sustainable element.
Let’s look at each in turn.
First, local currency.
“If you look at it from a spread basis, where issuers can fund in dollars, we saw the interests of issuers and investors matching – particularly in the Mexican peso and Chilean peso – which are great examples of being able to combine local and international demand and create a very attractive liability,” says Alexei Remizov, head of Latin America DCM at HSBC.