LATAM WRAP-Volatility keeps LatAm borrowers on sidelines
NEW YORK, Sept 28 (IFR) - A growing list of LatAm borrowers were sitting on the sidelines Monday as fears over the health of the Chinese economy and the knock-on impact of falling commodities weighed on asset prices.
A rout in the shares issued by commodities trader Glencore and the difficulties faced by borrowers in the US credit markets have only added to the gloom hanging over the Latin American primary market, where the Province of Neuquen abandon its 12-year bond sale on Friday.
And while much of the remaining pipeline comes from favored Mexican credits away from the oil space, bankers are wondering whether such issuers are willing to pay the volatility premiums that investors are likely to demand.
"Spreads are wider and new issue concessions are higher," said a syndicate official. "There is some sticker shock. If you don't need the money, your first order of business would be to wait."
Mexico's state-owned development bank Bancomext and white goods manufacturer Mabe wrapped up roadshows last week, but have yet to emerge with deal terms, while REITs Fibro Uno and TerraFina have been languishing on the sidelines for several weeks now.
"Bancomext could go, but they may have a tough time coming at these levels," said a senior DCM banker away form the deal. "That is where you are going to have difficult conversations (with borrowers)."
The resilience some Andean and Mexican names have shown to the broader contagion from Brazil was also showing some cracks on Monday.
America Movil's 2042s, for example, were being spotted at 220bp-215bp after closing at around 195bp on Friday, said a New York based trader.
Even sovereign debt issued by Mexico, a country praised for quickly proposing budget cuts in the face of falling oil prices, has suffered steep price declines in recent days. Continuación...