January 12, 2018 | Cbonds
Dear Cbonds users! We are happy to announce that Cbonds expanded its coverage of Latin American markets ( The website includes 4500 issues of domestic corporate and municipal bonds of Latin American countries, with the total volume equal to 273 billion USD.
Characteristics of the bond market
The main issuers in the domestic corporate bond market of Latin America are the financial companies (banks, leasing companies, financial holdings), among which Santander Leasing, Dibens Leasing, and Banco Davivienda are notable in terms of total volume of issues. The most popular currency of issues is the US dollar.
About half of the Latin American issues have a floating coupon rate. Basically, these securities are linked to the consumer price index, which is explained by macroeconomic uncertainty and high inflation in many countries of the region. Inflation-indexed bonds were most widely spread in Brazil and Colombia. Also, the Latin American market is issuing bonds denominated in an alternative, inflation-free currency (UVR, UYI and others). For example, the issue of Credifamilia Compania de Financiamiento Comercial for 155 million UVR ().
In Latin America, there are about 40 exchanges of various types. The largest bond exchanges in Latin America are the , the Mexican Stock Exchange, and the Colombia Stock Exchange.
The development of Latin American financial markets takes place through the integration of exchanges. As an example, we can take an integrated Latin American market (MILA), which unites the exchanges of Mexico, Chile, Peru, and Colombia. This platform is designed to simplify the access of foreign investors to local markets and provide a wider choice of securities and issuers. In order to develop the national financial market and attract the largest number of companies, the main exchanges of Argentina are united under a common trading platform known as BYMA (Bolsas y Mercados Argentinos).
In 2017, economic activity in Latin America gradually began to recover after a long period of recession. The decline in commodity prices in 2010-2015 led to a reduction in the export revenues of the countries of the region, and as a result, to the weakening of national currencies and the growth of inflation. Today, Latin American countries are on the threshold of a new economic cycle, when the export of raw materials ceases to be the main driver of economic development. The compound growth rate of the region's GDP is estimated to be 1.2% in 2017 and 1.9% in 2018, according to experts. Along with this, there is a decline in inflation to 4.2% and 3.5% in 2017 and 2018, respectively.
International rating agencies assigned non-investment credit ratings to most Latin American countries, which is caused by a drop in commodity prices and politically volatile environment. However, the gradual improvement of the economic situation helps raise the credit ratings of a series of countries. For example, over the past few years, Argentina's credit rating has been improved from Caa1/B-/RD to B2/B+/B. The highest credit ratings are assigned to countries such as Chile – Aa3/A+/A, Peru – A3/BBB+/BBB+, Mexico – A3/BBB+/BBB+ (Moody's / Standard & Poors / Fitch Ratings).
To ensure long-term growth of the region, it is necessary to adopt measures that facilitate the transition from a raw material export industry to a more competitive innovative economy based on the production of high-value-added products. The following factors are intended to ensure future economic growth: overcoming political crises in a series of countries, reducing social inequalities, fighting corruption, seeking new trading partners, and promoting financial integration.
|Country||Amount of issues of domestic corporate and municipal bonds in circulation||Market size, USD mln||Principal financial centre||Representative issue||Current coupon, %|
|Argentina||387||13413.9||Buenos Aires Stock Exchange||YPF, FRN 24sep2019, ARS (35)||23.4805|
|Bolivia||259||3099.3||Bolivian Stock Exchange||Toyosa, 4.9% 27oct2022, BOB (D)||4.9|
|Brazil||1226||160023.8||BM&FBOVESPA||CCR Metro Bahia, FRN 5may2020, BRL (004)||5.58139|
|Dominican Republic||250||2779.8||Dominican Republic Stock Exchange||Empresa Generadora de Electricidad Haina (Ege Haina), 11.50% 21jul2026, DOP (06)||11.5|
|Colombia||342||39203.9||Colombia Stock Exchange||Banco Popular (Colombia), 7.34% 14feb2020, COP (B3)||7.34|
|Costa Rica||288||12909.5||National Stock Exchange of Costa Rica||Banco Davivienda (Costa Rica), 6.1% 23feb2018, CRC (E 6)||6.1|
|Panama||579||7919.8||Panama Stock Exchange||Aliado Leasing, 8.5% 27nov2022, USD (N)||8.5|
|Paraguay||417||6949.9||Paraguay Stock Exchange||Banco Continental Paraguay, 6.5% 30apr2027, USD (4)||6.5|
|Peru||300||9576.1||Lima Stock Exchange||A Jaime Rojas Representaciones Generales, 5.9687% 16jul2019, USD (D)||5.9687|
|Trinidad and Tobago||22||1215.5||Trinidad and Tobago Stock Exchange||Trinidad and Tobago Housing Development Corporation (HDC), 8.5% 10oct2021, TTD (T3)||8.5|
|Uruguay||35||562.8||Montevideo Stock Exchange||HRU, 4.17% 30nov2018, USD (4a)||4.17|
|Ecuador||295||1355.9||Guayaquil Stock Exchange||Alimentsa, 8.5% 13mar2019, USD||8.5|
|Jamaica||14||124.5||Jamaica Stock Exchange||X Fund Properties, 7% 28feb2018, USD (A)||7|
|Others||63||13464.3||-||Barbados National Oil Company (BNOCL), 6.75% 31dec2019, BBD (4)||6.75
Traditionally, for all issues, the following features are available: bonds calculator, main placement parameters, payment schedules, issue-related documents. Daily bonds quotes are also available.
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