Latin Finance - November/December 2011 - 2

Front Notes

murky markets
vents unfolding in Europe present difficulties for DCM bankers covering Latin America, but they also open the door to opportunities as well. Certainly, syndicate desks have had a tough time as announcements from euro-zone leaders have lifted and then deflated market sentiment, often in the space of a few hours. A decision to pull the trigger on a bond in the morning may seem like a terrible mistake by the afternoon. Greek Prime Minister George Papandreou’s surprise call for a referendum on the country’s bailout plan is just one bizarre example of how erratic the situation in Europe can be, and it must have left bankers roadshowing LatAm bonds at the time throwing their hands up in exasperation. The unpredictability that has characterized the market is likely to remain for the foreseeable future, and bankers had better learn to live with it. European leaders each time have shown they are incapable of solving the continent’s debt crisis in one fell swoop and the road to calmer markets is likely to be a long and frustrating one. Still, LatAm’s new bond issuance volumes have picked up driven by quasi-sovereign and bluechips names and even the odd split-rated and junk credit as well. Notwithstanding the volatile backdrop, their ability to tap is hardly surprising given the amounts of cash investors have to put to work and the appeal of LatAm in a world beset by problems. In an environment where US rates are still low and where Europe is going through its own credit deterioration process, cash-rich LatAm names offer an attractive alternative. Murkiness over market direction makes a strong argument for issuing now rather than later. For instance, the timing of Arcos Dorados’s follow-on in October was thought to have been driven by those exact sentiments after private equity investors cashed in despite the less-than-ideal conditions. The same would apply to borrowers that need to raise cash now. New issue premiums may vary but as one banker puts it, those issuers that get the joke realize premiums are secondary to where they can lock in rates at time when the 10-year US Treasury has been trading around the 2% area and the long bond at around 3%. . The urgency to issue is perhaps made more acute by the pressures banks are being put under to recapitalize in the face of euro-zone debt woes and ahead of Basel III. All this will have implications for the broader bond markets as financial institutions retrench and sell assets. The dealer community is already less committed to providing liquidity in the secondary markets, which by itself may be a positive for DCM as investors will have to seek paper in the primaries instead. However, the withdrawal of lending by European banks, plus the sale of assets, could have a detrimental impact on pricing. One obvious consequence is a steep rise in bond supply as European corporates, which have traditionally relied on loans, raise funding through bonds instead. This also holds true for infrastructure borrowers, creating an opportunity for DCM bankers that can create structures that sell in the bond market. With any luck, those kinds of deals will prove lucrative at a time when DCM bankers are increasingly grumbling that fees on cross-border trades are reaching ridiculously low levels, even for a region long-known for borrowers that squeeze leads to the last cent. The increasing number of financial institutions doing business in LatAm certainly has exacerbated the problem, especially with the recent entrance of large Brazilian commercial banks that have traditionally stayed away from the capital markets. Pressure to clinch mandates have also intensified as financial institutions continue to shed jobs and as bankers come under pressure to show pipeline as year-end approaches. In this environment, it may make more sense to quietly attend to money spinners such as infrastructure bonds or under-the-radar deals rather than get involved in higher-profile, but less economical trades. Keeping one’s head below the parapet may be the best strategy in this environment. LF

EDITOR Paul Kilby NEWS EDITOR Ben Miller SENIOR REPORTER Raul Gallegos REPORTERS Mariana Santibáñez, Karen Schwartz CONTRIbuTORS Ivan Castaño, Sean Mattson ART DIRECTOR Rosa Matamoros-Sense COVER ILLuSTRATION Gary Neill COmmERCIAL DIRECTOR James Norton, T +1 305 428-6273 DIRECTOR Of buSINESS DEVELOPmENT Teresa Aguilar, T +1 212 224-3051 REGIONAL DIRECTOR, bRAZIL J. Albert Negrón, T +1 305 428 6275 SENIOR mANAGER, mEXICO, CARIbbEAN, SOuTHERN CONE Arielle Schrader, T +1 305 428 6274 VENEZuELA REPRESENTATIVE Matthew Perks, T +1 718 260-8970 DIRECTOR Of CONfERENCES Michael Brosgart SENIOR EVENTS mANAGER Omar Suarez EVENTS mARkETING mANAGER Alex Rubin CLIENT RELATIONS mANAGER Audrey Cechinel EVENTS PROGRAmmERS Teddy Ward, Aarti Bhatnagar mARkETING mANAGER Hilary Neil CIRCuLATION mARkETING mANAGER Patricia Arcic OffICE mANAGER Teresa Romero ASSISTANT TO THE CEO Vicky Maqueira LATINfINANCE bOARD Of DIRECTORS PRESIDENT Christopher Garnett DIRECTORS Stuart Allen, Colin Jones, Giuliana Moreyra CHIEf EXECuTIVE OffICER Stuart Allen CHIEf OPERATING OffICER Giuliana Moreyra

E

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Latin Finance - November/December 2011

Table of Contents for the Digital Edition of Latin Finance - November/December 2011

Latin Finance - November/December 2011
Contents
Contagion Risk
Mexican Credit
China Investment
Loan Markets
Mexico Banks
Sub-Sovereign Debt
Banks of the Year 2011
Argentina Investor Report
Reversal of Fortunes
Latin Finance - November/December 2011 - Latin Finance - November/December 2011
Latin Finance - November/December 2011 - Cover2
Latin Finance - November/December 2011 - Contents
Latin Finance - November/December 2011 - 2
Latin Finance - November/December 2011 - 3
Latin Finance - November/December 2011 - 4
Latin Finance - November/December 2011 - 5
Latin Finance - November/December 2011 - 6
Latin Finance - November/December 2011 - 7
Latin Finance - November/December 2011 - 8
Latin Finance - November/December 2011 - 9
Latin Finance - November/December 2011 - 10
Latin Finance - November/December 2011 - 11
Latin Finance - November/December 2011 - Contagion Risk
Latin Finance - November/December 2011 - 13
Latin Finance - November/December 2011 - 14
Latin Finance - November/December 2011 - 15
Latin Finance - November/December 2011 - 16
Latin Finance - November/December 2011 - 17
Latin Finance - November/December 2011 - 18
Latin Finance - November/December 2011 - 19
Latin Finance - November/December 2011 - 20
Latin Finance - November/December 2011 - 21
Latin Finance - November/December 2011 - Mexican Credit
Latin Finance - November/December 2011 - 23
Latin Finance - November/December 2011 - 24
Latin Finance - November/December 2011 - 25
Latin Finance - November/December 2011 - China Investment
Latin Finance - November/December 2011 - 27
Latin Finance - November/December 2011 - 28
Latin Finance - November/December 2011 - 29
Latin Finance - November/December 2011 - Loan Markets
Latin Finance - November/December 2011 - 31
Latin Finance - November/December 2011 - 32
Latin Finance - November/December 2011 - 33
Latin Finance - November/December 2011 - Mexico Banks
Latin Finance - November/December 2011 - 35
Latin Finance - November/December 2011 - Sub-Sovereign Debt
Latin Finance - November/December 2011 - 37
Latin Finance - November/December 2011 - Banks of the Year 2011
Latin Finance - November/December 2011 - 39
Latin Finance - November/December 2011 - 40
Latin Finance - November/December 2011 - 41
Latin Finance - November/December 2011 - 42
Latin Finance - November/December 2011 - 43
Latin Finance - November/December 2011 - 44
Latin Finance - November/December 2011 - 45
Latin Finance - November/December 2011 - 46
Latin Finance - November/December 2011 - 47
Latin Finance - November/December 2011 - 48
Latin Finance - November/December 2011 - 49
Latin Finance - November/December 2011 - 50
Latin Finance - November/December 2011 - 51
Latin Finance - November/December 2011 - 52
Latin Finance - November/December 2011 - 53
Latin Finance - November/December 2011 - 54
Latin Finance - November/December 2011 - 55
Latin Finance - November/December 2011 - 56
Latin Finance - November/December 2011 - 57
Latin Finance - November/December 2011 - 58
Latin Finance - November/December 2011 - 59
Latin Finance - November/December 2011 - 60
Latin Finance - November/December 2011 - Argentina Investor Report
Latin Finance - November/December 2011 - 62
Latin Finance - November/December 2011 - 63
Latin Finance - November/December 2011 - Reversal of Fortunes
Latin Finance - November/December 2011 - Cover3
Latin Finance - November/December 2011 - Cover4
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