NEW YORK, Sept 17 (IFR) - The Federal Reserve’s decision to put off a hike in interest rates in September could pave the way for new bond sales in Latin America as soon as Friday, according to bankers covering the region.
The combined effect of a small rally across emerging markets bonds and tighter US Treasury yields means all-in financing costs are already looking more attractive for a number of borrowers in the region.
“Tomorrow is definitely open assuming the market feels fine,” said one syndicate official. “All-in yields should be unchanged to better for most names.”
And while the five issuers currently in the pipeline had already announced their plans ahead of Thursday’s announcement, a positive tone for fixed-income assets might be all it takes for borrowers to pull the trigger over the coming days.
“The primary calendar is going to start in earnest for both US investment-grade and LatAm,” said a second syndicate official. “You are going to see investors a bit more confident in terms of adding risk.”
Mexican real-estate investment trust Fibra Uno and Terrafina are the most likely candidates to move first, having already completed roadshows ahead of their potential transactions.
Low-cost airline GOL could also break a more than three-month lull for new issues out of Brazil after announcing investor meetings next week ahead of a potential new financing.
Given that the company’s senior unsecured notes are already trading at distressed levels, bankers away from the trade said the new deal is likely to come in a secured format.
In the secondary markets, sovereign bonds across the region rallied by between one and two points in the late afternoon, and appeared to hold to those gains even as US equities turned slightly negative towards the end of the session.
“Equities are doing a bit of a reversal but we are still holding our game,” said a LatAm bond trader. “That is a positive sign.” (Reporting by Davide Scigliuzzo; editing by Shankar Ramakrishnan)