South American bonds offer strong incentives

Latin American countries continue to capitalise on a high of record investment in emerging market bonds. At their highest investment rate for seven years according to the Institute for International Finance, expectations of interest rate rises in the US especially have helped strengthen bond yields.

The latest big offering is a a 10-year €500m bond issue from Brazil, targeted specifically at foreign investors, priced with a yield of 7.55 per cent.

And last week Ecuador’s president Lucio Gutierrez was in New York discussing plans for a bond issue.

Investment perceptions in the region appear positive, with opportunities for more local currency bonds expected with continued dollar weaknesses.

Latin American countries capitalised on the demand to widen their investor base. This week’s euro issue from Brazil followed an offering last September that was its first in two years.

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