Latin America Bond House: JP Morgan

IFR Awards 2023
5 min read
Jo Bruni

Captain in the storm

In a turbulent 2023 dominated by volatility and a few short windows, JP Morgan led in issuance volume in Latin America bonds. For participating in many of the region’s landmark deals and providing its expertise to help clients address the year’s unique challenges, JP Morgan is IFR’s Latin America Bond House of the Year.

It’s a testament to JP Morgan’s Latin America business that in a year in which international issuance was fitful, its market share was 400bp higher than the second-ranked bank, according to LSEG data.

“Market conditions were difficult in 2023, with windows of opportunities few and far between,” said Lisandro Miguens, head of Latin America debt capital markets. “Banks had the critical role of advising clients on the right windows to act on and transmitting confidence in the success of the deals in these challenging market circumstances.”

JP Morgan led 31 transactions in Latin America for a total of US$11.3bn of league table credit and market share of 15.7%, according to LSEG data. In terms of volume, it was ahead of the next bank by nearly US$3bn.

It opened the year with Mexico’s US$4bn dual-tranche transaction and continued advising sovereign issuers in key deals throughout the year, including landmark local-currency international offerings from the Dominican Republic, Chile and Peru.

It was a bookrunner in May on Peru’s first local-currency international offering since before the pandemic. The S9.185bn (US$2.5bn) 10-year local currency sustainable sovereign bond, the largest in the country’s history, was issued under Peruvian law amid the political turmoil which the followed the impeachment of former president Pedro Castillo in late 2022, yet it attracted a solid order book that peaked at S18.6bn.

“The transaction done by Peru was tremendous – not only because of the size of its local currency component, but also because it tested the resilience of the Peruvian story amid increased political uncertainty, a test which Peru passed,” Miguens said.

JP Morgan also advised the Dominican Republic on its biggest Global peso bond ever, contributing to the country’s effort to develop its local market for international investors and reduce exposure to foreign currency debt. Placing a Ps71bn (US$1.25bn) 12-year note in September, the first to be issued without an accompanying US dollar tranche – a proposed tranche in the currency was dropped, with the sovereign prioritising the peso bond – proved particularly challenging, given investor preference for more liquid options.

“This endeavour was challenging as investors tend to favour dollar-denominated instruments with a lot of liquidity,” Miguens said.

The transaction was nonetheless well received. Investors placed orders which more than doubled the size of the deal and the issuer was able to tighten pricing by 25bp. US and UK investors purchased 60% of the offering.

JP Morgan also advised many of the year’s landmark deals by corporate issuers.

In June, it reopened international DCM for Brazilian high-yield corporate issuers after 14 months, with a US$550m seven-year bond issued by energy holding company Cosan. In September, it led a US$1.2bn financing package for Brazilian exporting meat packaging company Minerva for the acquisition of assets sold by Marfrig, another Brazilian meatpacker, which included a new US$900m 10-year high yield bond.

It helped reopen the subordinated debt market for Latin American financial institutions after a 19-month pause, when BBVA Mexico issued in June a US$1bn 15-year non-call 10 Tier 2 bond.

“The Tier 2 capital market had been closed since February 2022 for Latin America and many existing Tier 2 capital bonds were maturing or [issuers were] not going to the market to refinance. We worked with BBVA Mexico to go to the market in June with a US$1bn capital raise, which was very bold at the time,” Miguens said.

BBVA Mexico was able to compress price by 30bp from the initial price talk to price at a yield of 8.45%.

America Movil sought advice from JP Morgan to execute the largest global local currency deal ever by a Latin American corporate. The Mexican telecoms provider raised Ps17bn (US$995m) in June through a 9.5% seven-year senior Global green note which is a part of a larger programme seeking to create a peso-denominated corporate bond market for international buyers.

In another transaction of note, JP Morgan collaborated with other investment banks and IDB Invest in the creation of a complex financing solution that allowed 14 energy generation companies in Chile to monetise sovereign-backed power-tariff receivables. In August, an SPV known as Chile Electricity Lux repackaged those payment certificates and sold them as a new US$784.25m 6.01% 9.5-year senior unsecured note.

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