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Banking

FIG issuance: Latin American bank bond issuance booms

So far Santander Mexico and BBVA Bancomer are the only Mexican banks to issue international bonds. They came to the market at the end of January to each sell Ps5 billion ($413.5 million) of three-year bonds (both deals were self-led, jointly with Banamex) and both priced at 20 basis points over TIIE.

However, elsewhere in Latin America banks have been more active, with issuance from financial institutions wanting to replenish capital and fund their credit expansion.

"There has been a lot of supply of bank paper in Latin America already in 2011 and it has been across the spectrum of size and credit," says Katia Bouazza, head of global capital markets, Latin America, at HSBC, which managed deals for Brazilian banks Bradesco, Banco Daycoval and Banco Votorantim. Banco Votorantim raised $750 million in early February with a five-year bond that priced at 98.834 with a 5.250% coupon to yield 5.520% – a level that attracted $2.9 billion of orders. Bouazza says there is a lot of appetite across the credit curve for bank paper, and the demand is higher when spreads are more reasonable. "Most of the names have access but banks will have to be careful in choosing their market windows and how they price and attract investors," she says.

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