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Capital Flows to Latin America and the Caribbean 2019 Year-in-Review

In 2019, international bond issuance from Latin American and the Caribbean (LAC) increased and bond spreads tightened, but credit quality continued to deteriorate although at a slower pace relative to 2018.

13 March 2020|Briefing note

1. Bond issuance in 2019 was 26% higher than in 2018

Lowering global interest rates brought issuance volume up in the region. Total LAC debt issuance in international markets in 2019 was US$ 119 billion, compared to US$ 94 billion in 2018. 

2. The Top 3 Issuers: Mexico, Brazil and Chile  

Mexican, Brazilian and Chilean borrowers were the main contributors to the region’s performance. Together they were the three top issuers (sovereign and corporate issuance combined) and accounted for 64% of the total LAC bond issuance in 2019.  

3. The biggest share of bond issuances came from the corporate sector 

The growth in LAC bond markets in 2019 was driven by the corporate sector (including corporations, banks, quasi-sovereigns and supranationals), which accounted for 64% of the total issuance.

4. Latin American stocks and debt spreads recovered from last year

In 2019, Latin American debt spreads tightened 222 basis points and stocks gained 14%. Renewed optimism regarding a trade resolution between the United States and China in August led to further spread-tightening and widening in equity prices.

5. Credit quality continued to deteriorate, but at a slower pace

 

Negative credit rating actions (including downgrades and downward outlook revisions) have outnumbered positive actions in the region for seven years in a row, but the imbalance improved in 2019. There were four more negative actions than positive in the region in 2019, compared to fifteen more in 2018.

6 Green bond issuances from the region made a comeback 

There was a recovery in green bond issuances from the region in international markets and Chile became the first sovereign in the region to issue green bonds.

*For a complete and detailed analysis see the PDF attachment with the full document Capital Flows to Latin America and the Caribbean – 2019 Year-in-Review