Magazine article American Banker

Latin America Debt Finds Ready Buyers in a Revived Market

Magazine article American Banker

Latin America Debt Finds Ready Buyers in a Revived Market

Article excerpt

J.P. Morgan & Co. and Chase Manhattan Corp. have underwritten a $1.5 billion bond issue for Mexico, the second big issue to come out of Latin America this year.

Banking sources said both the narrow margin of the 10-year issue's yield over equivalent U.S. Treasury securities and the fact that the issue was increased to $1.5 billion, from $1 billion, point to a marked strengthening of demand for emerging-market paper.

Argentina has already successfully done $774 million and $403 million bond issues, and it is expected to come to market soon with a $1.5 billion issue.

"The market is off to a very good year so far," said Michael Schoen, vice president at Morgan and co-head of its emerging-market syndications desk in New York. "We expect spreads are going to tighten further."

Banking sources said the most interesting part of the Mexican issue is that more than half of it was bought by "high-grade" investors such as mutual funds, insurance companies, and pension funds. Most such investors precipitously fled emerging markets after financial crises hit Asia, Russia, and Brazil.

"We're not just talking about dedicated emerging-market funds but about a much broader range of investors who are coming back in because of the scarcity of good-yielding, U.S.-dollar-denominated issues," said a banking source.

The quick pace of issues early in the year comes after optimism has grown that Latin America and other emerging markets have put their financial woes behind them and are poised to rebound. …

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