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LatAm new issues: Strong demand leads to upsizing and tight spreads

    Rafael Elias
    Rafael Elias

    Director, Latin America Credit

    Tellimer Research
    15 January 2020
    Published byTellimer Research

    Brazil's Rede D'Or "benchmark-sized" new issue was launched on Tuesday with a US$750.0mn amount, and a yield of 4.50%. This was lower than the initial price guidance in the 4.625% area, but within the range given shortly after the announcement of +/- 12.5bps. Later during the session, the issuer up-sized the amount issued to US$850.0mn, demonstrating the strong demand for the BB-/BB new bond and showing that there is not only investors' appetite for high-grade issues (that have dominated the primary market so far this year), but also, that there is plenty of demand for yield as well.

    In Chile, Geopark Limited launched US$350.0 million in new Senior Unsecured, 7-year (non-call 4) bonds, priced to yield 5.625%. Initial Price Guidance was the 6.0% area, so the company was able to print at tighter levels which for Chile, even if the company is rated only B+/B+, look attractive when compared to the recent issues from this market;

    We believe that the market was ripe for high-yield new issues given that before today, the only issue falling into this category had been Colombia's Termocandelaria (BB/BB+), while the rest of the Primary Market had been limited to high-grade issues, mostly corporates from Chile and the U.S. dollar and the Euro-denominated Mexican sovereign prints. 

    A little bit for everybody.