LATAM WRAP-State entities take lead in LatAm primary market

martes 20 de octubre de 2015 16:13 GYT

By Paul Kilby

NEW YORK, Oct 20 (IFR) - Mexican development bank NAFIN became the latest state entity to announce roadshows on Tuesday, but LatAm corporates remain firmly sidelined in the face of higher funding costs.

Two real-estate investment trusts, a Mexican white goods manufacturer and a Brazilian airline have all failed to pull the trigger on trades despite relatively benign conditions.

"I don't see them moving forward," said a syndicate banker away from the deals. "We had a couple of days last week that were more than open for them to go. I am guessing the all in spreads and concessions are holding them back."

Top quality sovereigns and quasi sovereigns have been the credits of choice among investors who have taken a more defensive stance toward EM and demanded higher premiums as a result.

Bankers, for instance, had Uruguay paying a new issue concession of anywhere between 20-30bp on its new 4.375% 2027s which was priced on Monday at 99.14 to yield 4.475% or 245bp over US Treasuries.

"New issue concessions on high-quality, low-beta sovereigns have come in the 20bp-30bp range depending on size and the day," said the syndicate banker. "That is the kind of environment we are in right now."

With yields on the 10-year US Treasury still hovering around 2%, all-in funding cost in dollars may still be relatively low, but corporates remain unconvinced.

"Pricing expectations are not aligned between the markets and issuers," said a second banker.   Continuación...