| NEW YORK
NEW YORK Aug 28 Latin American deals have made
their way to the market through the US and Europe's slower
summer months with borrowers getting offers from banks looking
to lend. While activity has been steady, bankers forecast
year-end volumes will be good though not overwhelming as Brazil,
Latin America's largest economy, is slated for a slower second
Deals have been tightly priced in recent months, especially
for top names. Carlos Slim's America Movil allocated a
$2.5 billion, five-year revolving credit facility in August,
bringing 21 banks to the table with pricing of 45bp over Libor.
"We have banks in all the markets being very aggressive.
It's good for the market and good for borrowers," said a banker.
Syndicated loan volume, including deals in the pipeline, has
reached $17 billion in 2014, already ahead of last year's $14
billion through the third quarter, according to Thomson Reuters
LPC. Total loan volume in 2013 was $22.9 billion, down 16
percent from 2012, and bankers expect this year to close largely
on par with last.
"That eagerness and demand remain, which is ultimately
what's been putting pressure on pricing," said Felipe Macia,
head of loan syndications Americas at Standard Chartered, adding
that fee compression is another piece of the puzzle. "There's a
lack of supply and a lot of demand."
Tenors have also been getting longer. Pemex is in the market
with a MXN30 billion ($2.3 billion), 10-year amortizing loan
paying 95bp over the TIIE. And banks are selectively able to
accept tenors of the like. The third quarter is seeing a bulk of
funds being used for refinancing, which is expected to continue
into the fourth quarter. Some $5.165 billion so far this quarter
is slated for corporate purposes, against $1.36 billion for
project finance and $645 million for acquisitions.
Less volume is coming from Brazil. It had a robust first
half - though less so than some had expected - as borrowers
rushed to get deals done ahead of the World Cup and upcoming
elections. Volume in Brazil reached $7.38 billion in the first
half, where it saw $8.36 billion in 2013. But it appears to be
slowing, with less than $1 billion in deals reported for the
third quarter so far, according to Thomson Reuters LPC. "What we
hope for will be a flurry, another uptick right after the
elections," said Macia.
If borrowers perceive financing costs will likely rise later
on, they could jump at the opportunity.
Additional volume could also come from Mexican companies looking
for acquisitions, not only in Mexico but in other parts of Latin
America, the US and Europe.
"First semester was good, and I think things will continue
as positive," said a second banker about ongoing potential in
the country, citing activity in industrials, consumer products
Much of the LatAm loan volume has, in fact, come from Mexico
- almost $5 billion in the third quarter alone, including deals
in progress, versus $1.34 billion in the first half.
Meanwhile, energy reforms in Mexico have laid the groundwork
for more project finance-related activity, but the majority of
it may still be a bit down the road, said a third banker.
"You should start seeing things in 2015, but this was the
year in which the reforms were passed," said the banker. "But
the coordinating legislation had to be done."
Peru could see financing closing late this year or early
next for infrastructure projects it has in the works, said a
fourth banker. One of the most advanced, for Metro de Lima's
Line 2, could close a revolving credit facility with a project
finance structure as soon as the end of this year.
"Other than the Metro de Lima I think most of the projects
are going to be next year," said the banker, who is following
(Editing By Jon Methven)