Global Capital Markets Outlook

What are the critical trends shaping investment opportunities in markets around the world? What challenges and opportunities lie ahead? Our partners share their perspectives on what to watch for as 2018 picks up speed.

Top Trends to Watch in Latin America: A Q&A with Joy Gallup

Q: 2017 was by all accounts surprisingly active in terms of capital markets in Mexico, especially in the manufacturing sector. Has that trend continued into 2018?

A: There was a lot of volatility at the beginning of the year, with political uncertainty being reflected in the capital markets in Mexico. However, as the year moved on, the peso became more stable and more and more issuers were going to market in amounts that were almost unprecedented. There were a number of debt issuances, there were several IPOs, there was a lot of activity by major corporate clients. For this year, we expect volatility to increase again leading up to the Mexican elections in June, with greater stability in the markets thereafter. 

Q: Last year there was a lot of volatility expected with a new administration in the U.S., but that turned out to be more noise than substance. Now there’s a lot of volatility expected with Mexican elections coming up, as well as uncertainty about NAFTA. Is this noise or substance?

A: Much of the volatility has to do with peso movements caused by headlines, not the fundamentals of the economy or issuers’ financials. Many of our clients took care of their capitalization needs early coming into 2018 for this reason. As a result, the actual exposure to the worst-case scenario of NAFTA is much less than people think. Companies are global and stronger than they were two, three, or five years ago.

Q: Can you speak a bit about Mexican – and more broadly Latin American – debt issuers? Have they moved to local currency debt issuance, or are the dollar and the euro still the standard?

A: In 2017, some issuers chose to issue euro-denominated bonds to lower their dollar exposure. There were some markets – like Uruguay – that saw an increase in local-currency issuances for the same reason. Last September, Uruguay raised the equivalent of just over $1 billion in 10-year global peso bonds at 8.625%. While that helps to build the country’s peso-denominated yield curve, the downside is that they are relatively shorter-term offerings. In 2018, there may be a return to dollar or euro-denominated bonds in order to increase the length of the bonds.

Q: What’s your biggest takeaway for 2018?

A: At the end of last year and the beginning of this year we are seeing people trying to pre-fund their needs ahead of the expected volatility tied to the upcoming elections in several countries, as well as the NAFTA renegotiations. However, it’s very hard to predict what’s going to be coming down the road.  So my biggest takeaway for 2018, and what we’re telling our clients, is to try to take advantage of market windows whenever they can, and wherever they can. If there is a market for a euro type of deal, people will take it — for instance, we recently did a rare Swiss franc bond offering for a Mexican issuer. If the opportunity arises for a structured type of deal, we will do that.  We’re seeing these becoming more common rather than just doing a U.S. dollar-denominated bond. I’m looking forward to more pleasant surprises this year.

In Brief

Europe: Busy Year Ahead

After 2017 – which showed strong market resilience for IPOs both in continental Europe and the UK, notwithstanding Brexit uncertainties and contested elections in France, the Netherlands and Germany – we foresee a busy year for European capital markets. General Eurozone recovery, structural reforms led by President Macron in France, and Angela Merkel’s reelection in Germany are all strengthening investor confidence. We notably anticipate that Euronext and the LSE will attract new IPO candidates, mainly in the TMT, financial, consumer goods, and life science sectors.

Hong Kong: Top IPO Market in 2018?

We are optimistic that the Hong Kong Stock Exchange’s plans to reform its listing criteria will help the market remain competitive as one of the leading global markets. The proposed reforms have strong support from the government and should attract a wider range of companies, especially in the biotechnology, internet and technology sectors, to list in Hong Kong.  The expectation of these reforms, together with strong equity markets globally, has led to a surge of activity that could help Hong Kong become the top IPO market in 2018.

United States: Energy Players Go for MLPs

In our podcast, partner Doug Getten discusses the renewed interest in Master Limited Partnerships (MLPs) by energy companies, the benefits of MLPs over traditional IPOs, and how MLPs can structure themselves to be more attractive to investors. We also peer into the future to explore what’s in store for MLPs and midstream energy companies more broadly.

Hear more |

Recent Client Successes in Latin America


Advised Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities LLC in connection with Mexico City Airport Trust’s offering of US$4 billion of debt securities.



Advised CEMIG on an inaugural international bond offering by its subsidiary CEMIG Geração e Transmissão S.A. (CEMIG GT).



Advised Banco del Bajio, S.A. on its US$500 million international IPO.



Advised Concesión Ruta al Mar S.A.S. on the financing of the design, development, construction, commissioning and operation of the Concesion Ruta al Mar road project in Colombia.