LONDON -- Attractive fees and an existing Latin American trading base are enabling U.S. banks to return to the Euroband market through Latin American issues after years on the sidelines.
Several U.S. banks have become active lead managers or co-managers of Eurobonds this year, particularly for Latin American borrowers.
Bear Sterns, Chase, Chemical, Citibank, and securities firm Prudential are among those to have developed Eurobond syndicate operations, despite scaling back in previous years.
"We have been up to this point very much involved in emerging markets, but we are expanding into markets other than Latin America - the more mainstream ones," said Paul Charman, managing director of capital markets at Chase Investment Bank.
Traders say there is plenty of money to be made in Latin American Eurobonds.
Latin American Eurobond issuance has doubled so far in 1993 from 1992 levels to $16.9 billion, according to IFR Securities Data, with investors attracted to the high yields and becoming more comfortable with Latin American risk.
Fees on Latin American bonds, mostly denominated in dollars, are usually at least 1% of the issue price, while straight fixed-rate dollar issues for more mainstream borrowers may have fees of only a few basis points.
Low margins and falling credit ratings forced many banks, including U.S. banks, out of the Euromarket in the late 1980s.
Eurobond market-making proved particularly difficult in a secondary market which is often illiquid, and most banks have continued to stay away from market-making.
But U.S. banks are again moving up the credit rating ladder, and this enables them to offer a wider range of services to investors, syndicate managers said.
Chemical Bank's merger in 1991 with Manufacturers Hanover helped it to a Standard & Poor's rating of A-plus.
The bank has lead-managed around a dozen deals this year, more than twice the number of mandates it won last year.
Chase, meanwhile, has lead-managed 13 Eurobond issues this year, and has more in the pipeline, compared with 10 lead managements all last year.