South America

The nascent sustainability-linked bond (SLB) faced a big test this week with deals from the oil, power and steel sectors, and most notably from Brazil meat processor, JBS. But if the enthusiastic reception to the deals suggested the market passed with flying colours, there were calls for more scrutiny of the relevance of KPIs if the SLB label is to mean anything. Oliver West reports.

Latin American supranational Corporación Andina de Fomento (CAF) has become the first borrower from the region to sell paper linked to Sofr.

A trio of foreign banks tapped an attractive Swiss market this week, finding opportunities to top up their well-advanced funding programmes with a bit of pricing arbitrage.

Light, the fifth largest energy distributor in Brazil, began investor calls on Wednesday ahead of a proposed five year non-call three deal that it will use to redeem its only international bond. The company joins a long line-up of LatAm companies preparing to issue, with the strong pipeline likely to translate into new supply as soon as Thursday.

Bankers working on Brazilian meatpacker JBS’s $1bn sustainability-linked bond on Tuesday said that ESG funds had been responsible for some of the largest orders in the controversial company’s deal, as corporate borrowers in some of the least green sectors join the ESG debt carnival.

Santander Chile sold its first public international bond in over a year on Tuesday, turning to the Swiss franc market and pricing well inside its domestic curve as the local market loses its lustre.

Emerging market fixed income analysts are right to assert that the asset class is well placed to avoid a taper tantrum such as it endured in 2013. That does not mean issuers should not be hurrying up their funding plans.

Two Colombian oil exploration and production companies began deal marketing on Monday as bankers and investors said that continued social unrest and political volatility in the country will not stop bond buyers from putting cash to work.

Brazilian airline Azul is looking become the first LatAm carrier to sell senior unsecured bonds since Covid-19 battered the sector last year. The proposed five year benchmark would also be the first triple-C rated new issue from the region since the pandemic began.

Sell-side bankers say there could be up to 12 new issues from emerging market issuers this week as borrowers look to capitalise on extremely strong market conditions ahead of expectations that the Federal Reserve will cut its bond buying later in the year. Inversiones Latin America Power, one of the largest wind generation companies in Chile, was one of four LatAm companies to announce deal plans on Monday.

Brazilian steel producer CSN and Mexican building materials company Cemex continued a storming week for Latin American high yield issuance with new deals that attracted bumper orders and priced tight to bankers’ expectations — even if comparable deals were not always clear cut.

Brazilian government-owned oil and gas giant Petrobras took advantage of a buoyant market on Wednesday to clean up the long end of its curve, shrugging off political concerns with a new 30 year bond that came well inside fair value and left no doubt about the quality of funding conditions for Latin American issuers.