Central America

The Inter-American Development Bank (IADB) said on Wednesday that it would mobilise $1bn of resources to support Latin American and Caribbean countries in their efforts to acquire and distribute Covid-19 vaccines, as analysts warn most of the economic benefits from vaccinations may only reach Latin America in the second half of 2021.

Costa Rica’s finance ministry said on Monday that it planned to begin discussions over a new $1.75bn IMF programme in the second week of January. But though an agreement would likely drive a rally in the sovereign’s bonds, Fitch Ratings warned it would not remove debt sustainability pressures.

Standard & Poor’s cut Braskem Idesa’s credit rating from B+ to B on Friday, placing the rating on negative watch as the Mexican government’s termination of a gas transportation contract disrupted the polyethylene producer’s operations. The rating agency warned the company needs to address its gas supply shortage urgently, but some credit analysts eye a buying opportunity.

Guatemala has settled a long-running legal dispute with Florida-based Teco Energy, allowing it to pay bondholders and avoid defaulting on an international bond.

Central American sovereign Belize could be at risk of requiring yet another rescheduling of its bond payments, said analysts, as its debt reaches unsustainable levels and with the temporary relief that creditors granted earlier in the pandemic likely to be insufficient.

Guatemala’s international bonds prices finally reacted this week to its failure to make a November 3 coupon payment amid a legal battle with a US energy company. But the Central American government’s public credit office says a solution is imminent and bondholders appear confident that default will be avoided.

Mexico carried out its largest ever liability management exercise this week, refinancing more than $6.6bn of dollar bonds with new longer dated debt. But deputy finance minister Gabriel Yorio says that the sovereign will remain very active in international bond markets in the short term and is likely to be back in dollars early next year.

Mexican power generator FEL Energy, which sells 70% of its capacity to state-owned electric utility CFE, priced a debut bond deal on Wednesday as investors were unshaken by noise surrounding a different Mexican credit with a long-term agreement with a government-owned entity.

Guatemala’s head of public credit said on Wednesday that the Central American sovereign hoped to resolve in the “next two days” a dispute with Florida-based Teco Energy that has caused its fiscal agent in New York to freeze a coupon payment due at the start of this month.

Guatemala is locked in a legal fight with Florida-based Teco Energy that public credit director Rosa María Ortega said in a motion to a New York District Court endangered the Central American sovereign’s “perfect” bond repayment record.

Mexico will hold a virtual non-deal roadshow with Japanese investors next week, according to Gabriel Yorio, Mexico’s deputy finance minister.

Latin America DCM bankers’ promises that a sovereign would jump on recent market positivity materialised on Monday as Mexico turned to international bond funding for the fifth time this year with a heavily oversubscribed liability management exercise that totalled $6.625bn, once switch-tenders were included.