LatinFinance - November/December 2013 - 30

ASIA/
LATAM
KOREAN
INVESTMENT

Korean investment in Latin America is growing as banks, manufacturers and
engineers invest more and trade links deepen. By Ben Miller

Ties that bind

H

mexico's Pemex signed a memorandum
of understanding with Korea eximbank
(Kexim) that should set up a $2 billion credit
line.
Korean lenders - both government
banks and private sector ones - signed four
loans with latin american borrowers this
year, including the Recaudo deal. Dealogic
data indicates they totaled $753 million,
with Korean participation making up
around half that.
the most recent was a $174 million
12-year term loan for chilean shipper
compañía Sud americana de Vapores, to
which the Korea Development Bank (KDB)
contributed $54 million.
in recent years, Korean banks have been
increasing their lending to latin america.
activity peaked in 2012, when they signed

30 l atinfina nce.com - November/December 2013

Source: Jorge lascar

istory may not remember a $176 million loan
for Recaudo Bogotá as being the head-turning deal of 2013 in latin
america. But the funding, to develop and operate a fare collection
system for the colombian capital's public transport system, is notable
for one particular aspect: the participation of lenders Shinhan
investment corporation and Woori investment & Securities as
mandated lead arrangers.
the deal is the most recent of a handful of transactions for latin
american borrowers that involve private sector Korean lenders - as
opposed to the government banks that have become well-known
supporters of many projects in the region. in mid-october, for example,

PULLING IN: Bogotá's public transport
system has drawn loans from privately
owned Korean banks

six deals, worth $2.9 billion. of those, the
largest was a $1.3 billion deal for the etileno
XXi petrochemical project in mexico, in
which KDB was involved.
Korean fDi to latin america accounted
for $2.53 billion in 2012, according to Kexim
- up marginally year on year but a jump
from just $1.04 billion in 2009.
that comes as Korean asset managers,
along with other asian investors, are
buying increasing quantities of well-rated
dollar-denominated bonds from latin
american issuers, says Hugo Sarmiento,
chief financial officer of development bank
caf. Korea may not be a major stop on the
multilateral's road shows yet, but it offers
a useful pocket of liquidity for borrowers
wanting to diversify their investor base. a
won-denominated bond is not out of the
question for his institution.
"in the past we have been looking at
the Korean market," Sarmiento says. "the
opportunity just didn't open up with the
right economics for us," he adds, referring
to the swap rate to dollars.
While financial investment increases,
Korean companies, engineers, and builders
are also keen to deepen ties with latin
america. they have backed this up with
direct investment in recent years. more
lending by Korea's privately-owned banks
will be an important part of increasing
activity for other Korean entities in the
region.
meanwhile, free trade agreements have
cemented relationships with three latin
countries, and Korea renewed hopes to
close a long-sought mexico arrangement
following an october meeting of their
presidents.
Going private
Korea's activity in latin america is
overshadowed by that of china and Japan.
But Korean companies are aiming for a
bigger role in the region - particularly if
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