Brazil

Latin American bond bankers are putting on brave faces as the Covid-19 epidemic threatens to thwart what several sell-side houses say is an exceptionally busy March pipeline.

As volatility finally hit Latin American primary markets, the only action from the region’s issuers this week came through liability management, with Peruvian miner Nexa and Brazilian airline Gol both prepaying bonds.

Global market volatility triggered by fears surrounding Covid-19 outbreak, finally hit Latin America bonds on Monday just as bankers said they are preparing another heavy wave of issuance.

Brazilian airline Gol said on Friday that it would be redeeming in March a bond it had tried — and mostly failed — to repurchase a year ago.

Brazilian pulp and paper company Suzano is working on structuring a bond that would reflect its commitment to sustainability. But its chief financial officer told GlobalCapital that the green bond market was unable to maximise the impact capital markets could have on sustainability.

Latin America’s largest private sector lender Itaú returned to bond markets for the second time this year, following up January’s senior unsecured deal with an additional tier one perpetual note that was five times oversubscribed.

The final Latin American corporate deal before a hiatus for the earnings blackout period showed that borrowers were benefiting from volatility related to Covid-19, the official name of the coronavirus outbreak. However, a prolonged scare could bring negative consequences.

Though Latin America bond markets have so far dodged the brunt of global volatility related to Covid-19, the official name of the coronavirus outbreak, the region’s commodity dependence makes it particularly vulnerable to a China slowdown, say analysts.

Brazilian hospital operator Rede D’Or became the third Latin American company in a week to tap recently issued bonds as the region’s fixed income markets continue to defy coronavirus-related volatility elsewhere.

Latin American bond markets reached record levels of January issuance this week as primary activity ticked over despite the scare about the coronavirus, which the World Health Organisation declared a global emergency on Thursday.

Three Latin American companies issued bonds on Thursday and three more are meeting investors, as borrowers of all shapes and sizes assess the appetite for their debt.

Two long-established, but long-absent, Brazilian issuers have turned to international bond markets as US dollar bonds become a more competitive option for the country’s issuers.