NEW YORK, May 21 (IFR) - With a few Brazilian issuers set to tip their toes back into the Latam debt markets and US rate hike worries receding, bankers expect issuance volumes to pick up after Memorial Day.
In recent weeks, expectations of a Brazilian boost to issuance volumes have increased with a number of companies from the country lining up to raise debt.
A new issue from the Brazilian sovereign, which bankers have been longing for since April, is still seen by most as the ideal catalyst for a full reopening of the country's market abroad.
Yet after successful issues from Votorantim Cimentos, Itau Unibanco and JBS (through its US subsidiary), some blue-chip names could be tempted to pull the trigger on new bond deals and prompt others to follow.
"There are quite a few names that will need or are already looking to do some financing, but it is just a matter of what price and when," said the banker. "Before we see a wave of Brazilian issuers, we still need to see a couple of big guys out of the gates."
Bankers are expecting a rise in issuance activity amid growing conviction after the release of the FOMC minutes that interest rates may not be hiked at least in June.
"Now that the Fed is signaling that rates are going to be lower for a little bit longer people are adding (positions) in the secondary and feeling a bit more comfortable," said a syndicate banker in New York.
"Issuers should be taking advantage of the low rates."
Technicals also look good for issuance. Emerging market bond funds look set to extend their longest streak of inflows in a year, with both hard and local currency funds posting net inflows of around US$200m in the week ended May 20, according to preliminary data from EPFR Global.
The pipeline in the meantime continues to build.
Brazilian food company BRF and Mexican state-owned power company Comision Federal de Electricidad (CEF) this week joined the pipeline of potential debt issuers.
Among sovereigns, some market participants are betting that Jamaica could soon return to the capital markets to repay its Petrocaribe debt to Venezuela at a steep discount.
"They are going to do a Petrocaribe deal," said one US-based investor. "I suspect the hurdle there is going to be agreeing with Venezuela on the price."
Brazilian food company BRF (Baa3/BBB/BBB-) has hired BNP Paribas, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Santander GBM to schedule a series of fixed-income investor meetings in Europe ahead of the potential sale of a euro-denominated 144A/Reg S Green bond.
The meetings will take place in Frankfurt, Zurich, Geneva and Paris on May 26, and in Amsterdam and London on May 27.
Goldman Sachs is looking to bundle debt backing three of Colombia's 4G highway projects and sell it as an up to US$500m 144A bond in the US markets as early as July.
Mario Alberto Huertas, the local construction company that won the highway concessions, has appointed Goldman Sachs as global co-ordinator and lead arranger for the financing efforts. It has also retained local bank Structure Banca de Inversion as financial adviser.
Mexico's Comision Federal de Electricidad (CFE) has hired a string of banks to take it on the road to meet fixed-income investors.
The state-owned power company has selected BBVA, Bank of America Merrill Lynch, Citigroup, Goldman Sachs, HSBC, Morgan Stanley and Scotiabank to organize the meetings.
The borrower, rated Baa1/BBB+/BBB+, will be in Mexico City on May 27 and May 28, Los Angeles on May 29, London on June 1, Boston on June 2 and New York on June 3. (Reporting by Davide Scigliuzzo; editing by Shankar Ramakrishnan)