As the demand for Latin bonds strengthened over 2003, so did the supply, at least in terms of the number of investment banks competing for mandates. After years of a shrinking market as a result of banks pulling out or merging, the number of players is increasing again, as a consequence of European commercial banks deciding that debt capital markets activity is a good complement to lending operations.
The biggest new player is probably Barclays, which demonstrated its commitment to the region by snaring the big Mexican adios deal. In its pitch, Barclays promised to extend a $2 billion line of credit to Mexico, a move that certainly increased its chances of getting the mandate. In the end, Mexico asked Barclays to co-manage the deal with JPMorgan, which meant that they ended up lending $1 billion each.
Other European commercial banks doing deals in the region include ING, ABN Amro, BBVA and HSBC, which also underscored its commitment to the region by spending $815 million on the Brazilian operations of Lloyds TSB.
As the number of players increased, fees continued to fall. For Costa Rica, for instance, Deutsche Bank was recently rumoured to have won a mandate with a bid of just six basis points gross, or 1bp net of expenses including lawyers' fees.