LatinFinance - Special Edition - August 2013 - 91

dollar bond and a 5 billion peso ($462 million) global deal; the following year, it sold
an 8 billion peso 30-year bond. more recent
milestones include the region’s first renminbi bond in 2012 and the introduction of
Títulos de Crédito Extranjeros, a domestic
security affording the same simultaneous
access to foreign and domestic investors
that the sovereign has.
Strengthening institutional investors, like
insurance companies and mutual funds,
facilitates growth of local debt markets, says
García moreno.
Rules allowing companies to get to
markets faster could help encourage more
issuers. Here, gains are being made. américa móvil’s 2022 Títulos took advantage of a
platform that allows a quicker process from
filing to pricing.
With the program in place, the company
hopes to sell the bonds once a quarter,
ideally providing a benchmark for other
mexican corporates. it has raised 22.5
billion pesos so far, and brought in more
institutional investors from Brazil, chile,
colombia and Peru.
Graceless markets
in august 2013, borrowers across the region
were grappling with what looked likely to
be a protracted period of volatility as US
monetary policy normalized. Yields on
US treasuries shot up over the summer
months, as investors anticipated an end to
the federal Reserve’s quantitative easing
program in late 2013.
“many people are still trying to understand what demand will be like when rates
start to pick up,” says García moreno. But
markets must not forget the “lessons” of
the past, he says, pointing to the jolt in 1994
when alan Greenspan surprised the market
by doubling the US benchmark lending rate
in 12 months. now, after years of quantitative easing and with extensive portfolio
investment in emerging markets, the scale
of the problem is much bigger, he says.
“there’s this notion that you will only
have a graceful exit [from low US interest
rates],” he says. “in the past, markets have
not been graceful. But we are told this time
is different.”
issuers from latam and em must be
smart in taking advantage of good conditions when they can. many issuers have not,
he says.
“in the next few years, go to the markets
when the markets are open,” he says. “You
don’t know when they will continue to be
there. Don’t try to be too smart.” LF

Urbanization and a growing middle class will buoy demand for
raw materials, says former Vale CEO Roger Agnelli.
By Katie Llanos-Small

Roger Agnelli
The secret of success
as chief executive of Vale, Roger agnelli
oversaw the extraordinary transformation
of a Brazilian company into a global one.
During his 10 years at the helm – he left
the company in 2011 – agnelli turned Vale
into one of the world’s biggest mining firms.
in so doing, he helped change the face of
Brazilian industry.
in 2001, his first year with companhia
Vale do Rio Doce, as it was then known, the
company posted ebitda of 5.1 billion reais.
a decade later, adjusted ebitda was $33.8
billion (81 billion reais).
the impact of chinese demand for raw
materials on latin america’s commodities
exporters was an important part of this success, he tells LatinFinance.
“the demand for natural resources that
china brought, and is still bringing, to the
market has been incredible – demand for
food, energy and mining South america
benefitted very, very much from chinese
demand, as did other countries in asia and
even europe at the beginning of the last
decade.”
But he acknowledges that a slowdown in
chinese demand for commodities – a major
force behind latin america’s advance over
the past decade – could complicate the outlook. “i pray for china every day, because
for latin america, china was a kind of a
miracle,” he says.
But he dismisses suggestions that a period
of exceptional demand for raw materials
has come to an end. even if chinese growth
moderates, he says, it will still be significant.
“the second largest economy in the world
is going to grow 7%, which is a lot,” agnelli
says. moreover, urbanization and an expanding middle class will mean commodities are in ever-greater demand, he says.
Brazil offers the ideal environment to
incubate latin champions like Vale, he says.
“the global companies have to be here,”
he says. “the local market is very strong,
opportunities are very good. the macro-

economic scenario is good. other countries
in the region are doing very well, and the
middle class is growing.”
nevertheless, there remain a number
of shorter term challenges facing Brazilian
industry, he says.
“the labor force, education, infrastructure, regulation and reducing bureaucracy: those are the obstacles that we have to
overcome,” he says. “the long term trend
for countries like Brazil is still positive. in
the short term, it depends how well we do
our homework. and our homework from
my point of view is going to be measured
by how in favor of the market economy
we are.”
as well as searching out new areas of
exploration, at Vale agnelli also looked to
acquisitions for growth. of those, Vale’s
$18.68 billion purchase of canadian miner
inco in 2006 was the most notable. Vale’s
roger agnelli

“thE lOng tERm
tREnd fOR COUntRiEs likE bRAzil is
still pOsitiVE”
global reach helped it attract the finance –
and the deal cemented its status as a truly
global corporation.
now running his own energy investment
firm, aGn Participações, which is developing a biofuel project, agnelli is again looking at acquisitions. a tie-up with Brazil’s
BtG Pactual, called B&a mineração, has
already bought some greenfield copper
and fertilizer projects – areas the company
views as strategic.
this year’s market rout makes shopping
easier – adding “rationality” to the prices,
he says. “it’s much more feasible, but much
more challenging: you have to have the guts
to buy.” LF
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