Latin America Bond House: Goldman Sachs

IFR Awards 2019
4 min read
Miluska Berrospi

Rising up

Goldman Sachs undertook a meteoric rise to approach the end of 2019 among the league table leaders in Latin America. It also participated in many of the region’s most important transactions and added to its on-the-ground presence in the region. The bank is IFR’s Latin America Bond House of the Year.

In just one year, Goldman Sachs has catapulted itself to the number three spot in Refinitiv’s Latin America DCM league table for the past 12 months, up from a much lower number 21 the previous year. It has also invested significantly in its presence in the region, opening a Lima office in June and looking at adding additional offices in other LatAm countries.

“Goldman made an investment in being closer to the flow and being closer to the sovereign activity and plain vanilla corporate activity,” said Carlos Mendoza, managing director in Goldman’s Latin America financing group. “While other banks are reducing their footprints, we went the other way.”

The bank boasts league table credit for the period November 15, 2018 to November 15, 2019 of US$8.5bn – up 900% year-on-year, with a market share of around 7.9%. For the same period a year earlier, it had credit of just US$848.5m and a market share at just 1%.

“Complicated high-yield transactions, structured financing, liability management and FIG – those four things are really won with content and confidence from the issuer that you can deliver on harder transactions. Goldman led all those four spaces,” said Mendoza.

Goldman was involved in a variety of transactions spanning liability management – a recurring theme for the year – project finance, green, high-yield, investment grade, corporate, bank, local currency, quasi-sovereign and sovereign issuance.

It increased its number of sovereign issuers from none last year to four in 2019, conducting transactions for Paraguay, Uruguay, Panama and Mexico. Additionally, it participated in deals for two of the largest quasi-sovereigns in the region – Petrobras and Pemex.

Pemex was one of the year’s most complex operations and wins IFR’s Latin America Bond of the Year award for 2019. Goldman was lead active bookrunner and joint lead dealer-manager on an elaborate liability management exercise that allowed the oil company to reprofile around US$20bn in debt. The transaction featured a US$7.5bn bond issue and included a curve extension, a tap and a new deal.

It was a transformational operation for the struggling company, bringing back market confidence and lowering its chances of becoming one of the largest fallen angels in capital markets history, following a downgrade to junk by Fitch in June. The transaction made a big splash, obtaining one of the largest order books ever for Pemex, with orders exceeding US$36bn. It was also the largest transaction from a Mexican issuer.

Along with Pemex, Goldman worked on BBVA Mexico’s US$650m Tier 2 notes, AES Gener’s first green hybrid bond, plus deals for Televisa, Fibra Uno, CAF, LatAm Airlines, Republic of Chile, Ultrapar, Cable & Wireless and Millicom International, among others.

Mendoza said Goldman will continue to expand in Latin America.

Along with opening its new Lima office in June, led by longtime managing director and head of Goldman’s Andean region, Fernando Bravo, the bank has also added significant appointments to its team. In the summer it hired Mendoza, previously Deutsche Bank’s head of Latin America DCM, as a managing director. It also hired Josh Gajdos who also worked for Deutsche’s LatAm DCM operation.

“It’s a long time coming in terms of the strategy. [Rising up in the league tables] is not something that Goldman decided to turn on in 2019, it’s been something that’s been going on for two years,” said Mendoza.

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