Mexico

Soft demand and higher costs continue to hit Grupo Kaltex, leading Standard & Poor’s to downgrade the Mexican textiles company to B- last week and maintain the bonds on negative outlook.

With dollar markets requiring hefty concessions for Latin American issuers, the only new issue activity from the region since early July has arrived in the form of Santander Chile’s Swiss franc trade at the beginning of the month.

Some emerging markets (EM) syndicate bankers in New York are daring to dream that there could be new issuance from Latin America next week, but several buy-side players are less than enthusiastic at the prospect of new deals.

Mexico City on Wednesday became the largest city — and first city in Latin America — to sign the green bond pledge, a declaration seeking to encourage governments and companies to use green finance.

French bank Natixis has hired Benito Berber as chief economist for Latin America as it builds out its platform in the region.

Bonds from major Mexican issuers tightened on Monday after the USA and Mexico announced a preliminary bilateral trade to replace the North American Free Trade Agreement (Nafta).

The drought in Latin American new issuance stretched to six weeks by Thursday, but DCM bankers are now more concerned by prospects for September after contagion from Turkey hit Lat Am assets this week.

Some Latin American bond bankers said that a soft day in the region on Wednesday was even more worrying than Monday’s havoc as spreads continued to widen despite Turkish assets rebounding somewhat.

Fallout from a diplomatic incident drove yields on Turkish sovereign paper to almost 20% this week. While yields have come off their highs, the picture remains bleak for the beleaguered nation.

Mexican telecommunications company América Móvil will redeem €900m of its euro hybrid bonds when they become callable on September 6, it has told investors.

Lat Am bankers remain bearish on new issuance prospects for August despite quite busy secondary markets and as US investment-grade corporates and Asian credits flock to market.

EM bond markets around the world have been forced by difficult conditions to shut down early for summer. The only trade due this week, from South Africa's Eskom, will have to attract investors that are ready to hunker down and wait for September.