Brazil

Bond bankers covering Latin America say that they expect the September 7 Labor Day holiday in the US to herald the resumption of primary supply after only a handful of the region’s issuers tapped markets in August despite very strong conditions.

Several corporate issuers in Latin America could be on the cusp of losing their investment grade status, warned Fitch Ratings on Wednesday, with commodities-related businesses at particular risk.

Brazilian food group BRF wrapped up a now rare cash tender for existing bonds on Friday, buying back just under $300m of debt.

Latin American bond bankers say they expect new issuance to come at a calmer pace for the next few weeks, with just two Brazilian companies the only borrowers from the region to venture into primary markets this week.

Banco BV, the banking arm of Brazilian conglomerate Votorantim, raised $500m of five year senior unsecured bonds on Wednesday in a deal well supported by retail, local and Brazilian bank buyers as well as the usual EM-dedicated institutional accounts.

Just weeks after rating agencies stripped the issuer of its investment grade rating, Brazilian petrochemicals giant Braskem sold $600m of hybrid bonds that bankers said showed the company’s commitment to its credit metrics.

Lat Am bond markets continued to demonstrate growing risk appetite as Brazilian petrochemical company Braskem began marketing hybrid bonds on Tuesday.

Brazilian mining giant Vale returned to bond markets after a three year absence on Monday with a 10 year bond that bankers said left investors hungry for more.

Debt capital markets and syndicate bankers covering Latin America say that there is plenty of primary market activity on the way before the end of summer, as new issuance ticked over during the shortened July 4 week.

EM bond investors were treated to a second issue from a Cosan subsidiary in two days on Wednesday as Raizen, the fuel distributor and sugar and ethanol producer, reopened its 5.3% January 2027s.

Brazilian railroad operator Rumo tightened pricing sharply on the first green bond from Latin America in the coronavirus era on Tuesday, as bankers said that the environmental label gave investors more options over where to place the bond.

Brazilian railroad operator Rumo, which Fitch believes should only suffer a “limited” impact from coronavirus, is preparing what would be the first green bond from Latin America since the pandemic hit.