Latin American and Caribbean issuers are selling the most dollar debt abroad since the first week in February as a bond-buying plan from the European Central Bank bolsters demand for higher-yielding emerging-market bonds.
Aruba, Chile’s Banco de Credito & Inversiones and Banco Santander Brasil SA, the Sao Paulo-based unit of the Spanish lender, sold international debt today. The sales bring dollar- denominated issuance to $6.9 billion this week, the busiest since the period ended Feb. 3, when issuance reached $9.9 billion as Petroleo Brasileiro SA (PETR4) alone sold a record $7 billion, according to data compiled by Bloomberg.
ECB President Mario Draghi said today that policy makers agreed to an unlimited bond-purchase program to lower interest rates of struggling European nations and temper speculation of a breakup of the euro.
“It’s a big market positive,” said Jeremy Brewin, who helps manage $4.7 billion in emerging-market debt at Aviva Investors in London. “It’s not intentional, but liquidity creation by the ECB and very low nominal yields in mature markets have the side effect of making emerging markets look pretty good.”
Brewin said he bought bonds sold this week by Rio de Janeiro-based Vale SA (VALE3), the world’s biggest iron-ore producer.
Vale sold $1.5 billion of dollar bonds due in 2042 on Sept. 4 to yield 5.68 percent, the lowest the company had ever paid on similar-maturity debt, according to data compiled by Bloomberg. The sale snapped a one-month drought for Brazilian issuance.
Demand for Aruba’s $253 million sale of bonds maturing in 2023 was almost $2 billion from 148 accounts, according to a person familiar with the sale, who asked not to be identified because he isn’t authorized to speak publicly. Aruba sold its 4.625 percent bonds at a price of 100 cents on the dollar.
Santander Brasil sold $500 million more of its 2017 bonds to yield 4.3 percent, while Banco de Credito & Inversiones sold $600 million of five-year bonds to yield 3.125 percent, according to people familiar with the sales who asked not to be identified because they aren’t authorized to speak publicly.
Rounding out this week’s sales, the Brazilian government sold $1.35 billion of 2.625 percent dollar bonds due in 2023 to yield 2.686 percent, while Digicel Group Ltd., a Jamaica-based mobile phone company, sold $1.5 billion of 8.25 percent bonds due in 2020 at a price of 100 cents on the dollar. Bancolombia SA, a Colombian lender, sold $1.2 billion of 10-year notes to yield 5.2 percent.
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