LatAm countries tend to be active participants in the primary bond market during January and as a result debt service in January and July tends to be higher than in other months of the year.
The Dominican Republic, Colombia, and Mexico have the largest amount of bonds outstanding issued in the month of January, in percentage terms, standing at 50%, 44% and 32% respectively. If this trend continues, we believe some of these countries could be active participants in the primary market in January, and we also include Chile in the list.
In January, BBVA-covered LatAm countries’ hard currency denominated bond service obligations are expected to amount to USD2.29bn, much higher than in December when they totalled just USD426mn.
The largest coupon payments come from Brazil (USD543mm), Mexico (USD455mn) and the Dominican Republic (USD436mn).
While coupon payments are scattered on different dates throughout the month (please see the table on following page), the majority of payments (amounting to USD1.7bn) are scheduled for the second half of the month.
The bond debt service profile looks fairly manageable for 2022 and taking into consideration the fact that some LatAm countries have actively exchanged short-dated debt for longer maturities, there is not a substantial increase in bond payments until 2025.
It is worth noting that the Dominican Republic has about USD354mn in coupons due during the last week of the month, which could create some demand if part of the coupons are reinvested into DOMREP bonds.