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Opinion

Latin American credits gain safe-haven status

In tight markets, some Latin issuers are doing blow-out deals that demand investor attention.

One of the more remarkable aspects of the crisis that has gripped the financial markets over the past few months is that some Latin American credits have become safe havens. At 4.68%, Brazil’s 10-year benchmark bond yield, for example, is trading well inside equivalent notes for Portugal and Greece and on a par with Spain. Don’t forget that this is an election year in Brazil, with all the uncertainty that political risk in the region brings.

It’s not just at sovereign level that the best Latin borrowers are proving their credentials. Last month Mexican telecom América Móvil, part of multi-billionaire Carlos Slim’s empire, priced a €2.5 billion-equivalent triple-tranche bond in sterling and euros in a deal that blew out any other new issue in the investment-grade sector over the past few months.

The transaction included a €1 billion, 3.75% seven-year tranche; a €750 million, 4.75% 12-year note and a £650 million ($980 million), 5.75% 20-year bond. All three tranches were priced at the tight end of the range. They were also priced well inside where Spain’s Telefónica is trading and even inside some of BT’s bonds. Demand reached €4.5 billion for the euro tranches and £1.3

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