Mexico

Six Latin American issuers attracted more than $45bn of orders between them this week as the region’s bonds markets looked set to open Donald Trump’s term as US president in flying form.

Years of sub-par growth may finally hurt the ratings of Latin America’s two strongest economies, after Fitch placed Mexico and Chile’s ratings on negative outlook.

It’s that time of year when analysts dust off their crystal balls and make predictions for the next 12 months. In December 2015 not many were forecasting that Britain would vote to leave the EU, and even fewer were betting on a Donald Trump presidential victory, so investors would be wise to treat such missives with caution. Political risk is a capricious beast, even for the most seasoned market observers.

Fitch has partially blamed Donald Trump’s election as US president for hurting Mexico’s economic prospects after it became the third major rating agency to place the sovereign’s credit rating on negative outlook this year.

Mexico’s Pemex put smiles on the faces of bankers and investors with a $5.5bn triple tranche bond issue on Tuesday, the first Latin American bond to be sold in the US since before the US election.

Latin American bond bankers believe that Tuesday’s triple tranche bond issue from Pemex is likely to have been the last cross-border deal of the year from the region, even though the bonds provided further encouraging signs with a strong aftermarket performance.

Mexican state-owned oil giant Pemex responded to Mexico’s impressive first competitive deep-water oil auction by reminding investors of its prowess in markets with a $5.5bn triple tranche bond.

Latin American issuers again showed no interest in cross-border new issue markets this week as Mexican retailer and financial services company Grupo Elektra said it would use domestic bonds to prepay dollar bonds.

Senior Latin America DCM officials at some market-leading bookrunners said this week that they feared there would be no more dollar issuance from the region in 2016, although a couple of dissenting voices thought one or two issuers may “panic” and attempt to issue.

After a slight recovery in Latin American credit markets on Wednesday, Latin American bond bankers said the region’s borrowers should be ready and waiting to issue as soon as a window becomes available.

Just one-fifth of Mexican corporate bond issuers are likely to escape unscathed from US president-elect Donald Trump's proposed trade protectionism policies, said Fitch on Monday.

The benign reaction across capital markets to Donald Trump's surprise US presidential election victory did not spread as far as Latin America. A brutal sell-off on Thursday further complicated an already tough picture for Mexican issuers facing uncertain times as participants wonder just how badly a Trump presidency could affect the country, writes Oliver West.