拉美经济委员会-资本流向拉丁美洲和加勒比：COVID-19时期的2020年回顾（英文）-2021.3-58页_1mb

Summary of Capital Flows to Latin America and the Caribbean: 2020 Year-in-Review in Times of COVID-19

Core Content

In 2020, Latin America and the Caribbean (LAC) experienced significant capital flows, particularly in bond markets, driven by the need for funding amid the economic impacts of the pandemic and the search for higher-yielding assets in a low-interest-rate environment. The total bond issuance reached US$145.3 billion, the second-highest annual issuance on record, surpassing the previous year's level by 23% and only slightly below the 2017 peak of US$145.5 billion.

Main Points

• Sovereign Bond Issuance:

  • Sovereign issuance in 2020 amounted to US$65.1 billion, a 54% increase from 2019.
  • About 30% of this total (US$19.6 billion) was allocated to fund the response to the COVID-19 pandemic.
  • Venezuela saw the largest spread widening, increasing by 9,359 basis points, reflecting its severe economic situation.
  • Ecuador and Argentina experienced spread tightening after completing debt restructuring in the third quarter, but their spreads began to widen again in the fourth quarter.
  • Mexico had the highest sovereign spreads at the end of the year, at 361 basis points, following several downgrades.

• Corporate Bond Issuance:

  • Corporate issuance accounted for 55% of the total LAC bond issuance in 2020, a decrease from the previous three years.
  • Despite the pandemic's impact on certain sectors like retail, some corporate issuers managed to lower borrowing costs and extend maturities.
  • Brazilian retailers Lojas Americanas and B2W made their first international bond sales in the second half of 2020.

• Bond Market Trends:

  • LAC spreads widened by 40 basis points in 2020, with the most significant increase occurring in March (275 basis points).
  • Spreads narrowed from 703 basis points at the end of March to 386 basis points by the end of December.
  • The CBOE Volatility Index (VIX) reached a historic peak in March 2020, indicating heightened market uncertainty.

• Equity Performance:

  • Latin American equities declined by 16% for the year but recovered 77% from their March low, which was the weakest point in over 15 years.
  • Emerging market equity indices outperformed the G7 indices, which rose by 15%, but currency depreciation and the oil shock in early 2020 negatively impacted the region's equity performance.

• Credit Rating Actions:

  • There were 55 more negative credit rating actions than positive in 2020, and 36 more downgrades than upgrades.
  • Negative actions were most prevalent in the second quarter.
  • By the end of 2020, 16 sovereigns were on negative outlook from one or more agencies, with no positive outlooks.

Key Information

• Bond Issuance Highlights:

  • December 2020 was the busiest month for LAC bond issuance, with US$4 billion in sovereign bonds, including US$2.5 billion from Brazil.
  • January 2021 saw third-highest monthly issuance, although not as high as in 2020.
  • Some countries issued longer-dated bonds, such as Peru's 40-year bond and Brazil's 30-year bond.

• Green Bonds:

  • Green, social, and sustainability bonds accounted for 9.3% of total LAC bond issuance in 2020.
  • Ecuador was the first sovereign to issue social bonds in January 2020.
  • Chile and Mexico also issued social and Sustainable Development Goals (SDGs) bonds, respectively.

• Credit Outlook:

  • Moody's predicted that LAC sovereign creditworthiness would remain under pressure in 2021 due to increased debt and interest burdens.
  • The imbalance between negative and positive credit actions continued for eight years in a row, with 2020 being the worst year on record.

• Market Conditions:

  • Global risk sentiment and financial conditions remained supportive in early 2021.
  • Emerging market bond spreads are expected to remain low in 2021.

Prospects

• The focus in 2021 is expected to remain on refinancing due to low global interest rates.
• Latin American currencies are anticipated to perform better in 2021, following a poor year in 2020.
• The pandemic's impact on the region's financial landscape is expected to continue to influence credit quality and market dynamics.