LatinFinance - January/February 2013 - 36

Up in the world
D

espite the continued uncertainty
looming over the global economy,
Latin American issuers have much
to celebrate in 2012 – and much to be
optimistic about in 2013.
The winners of this year’s LatinFinance
Deals of the Year exemplify the increasing
importance and appeal of Latin American
assets and the growing size and innovation
of transactions. Although this is a theme
that has been emerging for many years, it
is only in the last two that the region has
truly come to be seen by investors as more
than just a diversification play.
Large and sophisticated debt capital
markets transactions were the highlights
of this year’s awards. Indeed, several
deals that were considered ordinary in
this year’s awards period – from October
1, 2011 to September 30, 2012 – would
have been regarded as groundbreaking
just a few years ago. High-grade issues
have come at lower than ever spreads
attracting a wide range of investors.
High-yield debutants have popped up
from unexpected corners. Cemex pushed
a wall of debt back three years, with
overwhelming acceptance from the
market. Bolivia – with its first international
offering since the 1920s – in October
issued a bond with a yield of under 5%.
Appetite from the buy side has been
immense. “There has been a lot of inflow
from institutional investors this year,” says
Blaise Antin, head of TCW’s sovereign
research team. “We don’t think that’s
going to change in 2013.”
The volume of straightforward bond
issuance shouldn’t distract from the
innovations that are still appearing: Banco
do Brasil has led the emerging markets
in preparing its borrowing for Basel III
regulations; an issuer that is not even the
biggest bank in Panama raised the first
covered bond in the emerging markets
outside of Korea; and a $7 billion four-

36 LatinFinance

DOTY stories-Final.indd 36

Global volatility did little to disturb the upward momentum of Latin
capital markets in 2012. As our Deals of the Year Awards show, their
importance and appeal have never been so great
tranche bond sale is not easy, even for
Petrobras.
“As we become a more mainstream
asset class we see a lot of crossover
investors embracing emerging
markets, and they want things in a nice
standardized package, recognized, and
liquid,” says Chris Gilfond, co-head of
LatAm DCM at Citi. “There has been a
huge surge in volume and while that
defines the bulk of the business, within
that there is still a bit of innovation taking
place.”
“Emerging market debt is eventually
going to look a lot like the US fixed income
market,” Antin says. “There will be a lot
of hard currency debt, corporate debt
and local currency debt, and you’ll have
a number of different strategies that
segment the asset class.”
The local markets have been fertile
grounds for testing new models also.
Pemex and Peru both inaugurated
global depositary notes for all-in-one
global-local currency and domestic market
sales. América Móvil later went one better
with such a seamless sale within a single
security. In Brazil, lower rates drove record
local bond issuance, Volkswagen’s Driver
One broke new ABS ground and the
infrastructure debenture class may have
finally gotten off the ground towards the
end of 2012.
Sovereigns didn’t struggle, with
sub-investment-grade names getting
rock-bottom rates and the highest rated
names engaging in sophisticated liability
management transactions that would
be the envy of many developed-world

nations. Mexico even entered the Japanese
market without a guarantee.
Bankers, however, point out that with
increased success come increased investor
and issuer expectations. A deal may get 17
times book one day –as did Mexichem’s
– but find the next day the window has
closed.
Though today’s costs in the bond
market are hard to beat, LatAm projects
and companies again have the loan market
as an option. Several deals coming out
in the final months of 2012 suggest a
more robust crop in the future. To the
extent they are able, European, US and
Asian lenders want to lend to solid LatAm
credits, such as Ternium. Regional banks
are picking up the slack when these
foreigners’ balance sheets don’t allow
them to lend.
LatAm assets offer an alternative to
the slow growth and financial ill-health
in Europe, the US and Japan. Companies
from across the world are eager to buy
into LatAm peers with healthy balance
sheets and sky-high growth potential.
They face more competition than ever
from a greater number of growing LatAm
powers. CorpBanca, Cencosud and Grupo
Sura are just a few examples of companies
transforming themselves into major
regional players.
“The pipeline is building every day,”
says Javier Vargas, co-head of investment
banking for Latin America at Credit Suisse.
“Companies are much more open to take
advantage of getting capital and putting it
to work and using it to grow.”
Others, such as Mexico’s América

January/February 2013

1/9/13 12:05 PM



LatinFinance - January/February 2013

Table of Contents for the Digital Edition of LatinFinance - January/February 2013

Latin Finance - January/February 2013
Contents
Remaking of a nation
Moving the market
Full court press
Andean push
Cleaning up
Best in class
Building up
Filling the void
‘Seize the opportunity’
LatinFinance - January/February 2013 - Latin Finance - January/February 2013
LatinFinance - January/February 2013 - Cover2
LatinFinance - January/February 2013 - 1
LatinFinance - January/February 2013 - Contents
LatinFinance - January/February 2013 - 3
LatinFinance - January/February 2013 - 4
LatinFinance - January/February 2013 - 5
LatinFinance - January/February 2013 - 6
LatinFinance - January/February 2013 - 7
LatinFinance - January/February 2013 - 8
LatinFinance - January/February 2013 - 9
LatinFinance - January/February 2013 - 10
LatinFinance - January/February 2013 - 11
LatinFinance - January/February 2013 - 12
LatinFinance - January/February 2013 - 13
LatinFinance - January/February 2013 - 14
LatinFinance - January/February 2013 - 15
LatinFinance - January/February 2013 - Remaking of a nation
LatinFinance - January/February 2013 - 17
LatinFinance - January/February 2013 - 18
LatinFinance - January/February 2013 - 19
LatinFinance - January/February 2013 - 20
LatinFinance - January/February 2013 - 21
LatinFinance - January/February 2013 - 22
LatinFinance - January/February 2013 - 23
LatinFinance - January/February 2013 - Moving the market
LatinFinance - January/February 2013 - 25
LatinFinance - January/February 2013 - Full court press
LatinFinance - January/February 2013 - 27
LatinFinance - January/February 2013 - 28
LatinFinance - January/February 2013 - Andean push
LatinFinance - January/February 2013 - 30
LatinFinance - January/February 2013 - 31
LatinFinance - January/February 2013 - Cleaning up
LatinFinance - January/February 2013 - 33
LatinFinance - January/February 2013 - 34
LatinFinance - January/February 2013 - 35
LatinFinance - January/February 2013 - Best in class
LatinFinance - January/February 2013 - 37
LatinFinance - January/February 2013 - 38
LatinFinance - January/February 2013 - 39
LatinFinance - January/February 2013 - 40
LatinFinance - January/February 2013 - 41
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LatinFinance - January/February 2013 - 60
LatinFinance - January/February 2013 - 61
LatinFinance - January/February 2013 - 62
LatinFinance - January/February 2013 - 63
LatinFinance - January/February 2013 - Building up
LatinFinance - January/February 2013 - 65
LatinFinance - January/February 2013 - 66
LatinFinance - January/February 2013 - 67
LatinFinance - January/February 2013 - Filling the void
LatinFinance - January/February 2013 - 69
LatinFinance - January/February 2013 - 70
LatinFinance - January/February 2013 - 71
LatinFinance - January/February 2013 - ‘Seize the opportunity’
LatinFinance - January/February 2013 - Cover3
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