LatinFinance - July/August 2014 - 2

JULY/
AUGUST 2014
FRONT NOTES

EDITOR-IN-CHIEF Taimur Ahmad
NEWS EDITOR Katie Llanos-Small
FEATURES EDITOR Dominic O'Neill
SENIOR REPORTER Eduardo García
REPORTER Karen Schwartz
CONTRIBUTOR Thierry Ogier
ART DIRECTOR Rosa Matamoros-Sense
COVER ILLUSTRATION Fredrik Broden
CARTOON ILLUSTRATION Christopher Weyant

Meeting the market
The timing of Ecuador's return to the Eurobond markets in June was not without its irony. The deal
came just a day after the US Supreme Court threw out an appeal against a lower-court ruling that
Argentina should pay its holdout creditors in full, almost ten years after the sovereign's $62.03 billion
debt restructuring. The ruling raised the prospect of a fresh default.
But Ecuador's Eurobond - its first since its own $3.2 billion default in 2008 - served as a reminder
that Argentina could nevertheless, in time, be afforded renewed access to international capital markets.
Ecuador's President Rafael Correa in April mooted a target of $700 million for the bond. But such
was the demand for the ten-year notes (more than two times oversubscribed) that leads Citi and Credit
Suisse increased the size to $2 billion.
The 7.95% coupon on Ecuador's bond was attractive when 10-year Treasury bills are yielding just
2.6%. With the US Federal Reserve chair Janet Yellen indicating shortly afterwards that US rates would
not rise until next year, it's not inconceivable that Argentina, too, could take advantage of investors'
search for yield.
As LatinFinance went to press, it remained unclear how Argentina's President Cristina Fernández
would attempt to resolve the country's predicament. But what is increasingly clear is that authorities
have little choice but to pursue healthy dialogue with international capital as the economy desperately
needs dollars to boost investment.
Strong oil prices, meanwhile, have helped increase confidence in Ecuador's ability to pay its debt.
The country has also taken steps to show its willingness to do so. For example, it embarked on a nondeal roadshow in April (which saw Ecuadorian officials in New York when Correa was in town) before
another roadshow in June.
For would-be Eurobond issuers, this should serve as a reminder of the need for regular engagement
with the market, to show openness to investors' demands. In that sense, governments are no different
from corporations seeking to raise capital.
In Latin America, the relationship between listed companies and their investors is especially emotive, partly because of more hazy distinctions between state and private sector compared to the US, for
example.
All companies have obligations to their investors. However, when state-linked or state-owned
firms raise capital on local and international
capital markets, just as when governments issue
debt, they take on a double responsibility: to
the investor and to the taxpayer.
Today Latin American corporations are
allowing greater participation by minority
shareholders. And as LatinFinance outlines in
this issue (see page 10), more receptiveness
to investors' views could prove a fillip for the
capital markets.
If the likes of Correa and Kirchner follow suit
by demonstrating recognition of their responsibilities to investors, the beneficiaries won't
just be their debt holders, but also their equity
holders: the public. LF

2 L ATINFINA NCE.COM - July/August 2014

DEPUTY PUBLISHER
Teresa Aguilar, T +1 212 224 3051
REGIONAL DIRECTOR
J. Albert Negrón, T +1 305 428 6275
REGIONAL DIRECTOR
Audrey Cechinel, T +1 305 428 6274
SENIOR MANAGER
Nicolas Cano T +1 212 224 3499
VENEZUELA REPRESENTATIVE
Matthew Perks, T +1 718 260 8970

CEO CONFERENCES Michael Brosgart
EVENTS EDITORIAL DIRECTOR Teddy Ward
LOGISTICS MANAGER Rebecca Chamberlain
DIRECTOR CAPITAL MARKETS
CONFERENCES Aarti Bhatnagar
MARKETING AND 1-1 MEETING
MANAGER Lily Costa
AUDIENCE GROWTH & ENGAGEMENT
MANAGER José Bolivar

HEAD OF DIGITAL PRODUCT
DEVELOPMENT & MARKETING
Marina Carbone
CIRCULATION MARKETING MANAGER
Patricia Arcic

OFFICE MANAGER Teresa Romero
ASSISTANT TO THE CEO Vicky Maqueira

LATINFINANCE BOARD OF DIRECTORS
PRESIDENT Christopher Garnett
DIRECTORS Taimur Ahmad, Stuart Allen,
Colin Jones, Giuliana Moreyra

CHIEF EXECUTIVE OFFICER
Stuart Allen
CHIEF OPERATING OFFICER
Giuliana Moreyra

Telephone: +1 305 416-5261
Fax: +1 305 416-5286
E-mail: editorial@latinfinance.com
www.latinfinance.com

SUBSCRIPTIONS HOTLINE:
U.S. +1 212 224-3427
U.K. +44 207 779 8999
E-mail address:
hotline@latinfinance.com
Subscriptions Customer Service:
+1 212 224 3455

SUBSCRIPTIONS
One-year, magazine-only subscription: $495
Premium subscription: $2,499
Send subscription orders to: LatinFinance,
1101 Brickell Avenue, Suite N1200, Miami,
FL 33131 USA
T 305-416-5261, F 305-416-5286.

© 2014 Latin American Financial Publications, Inc.
All rights reserved. Reproduction in whole
or in part of any text, photograph, or
illustration without written permission from
the publisher is strictly prohibited. Title is
protected through a trademark registration
with the US Patent Office. Indexed in
Information Access Company.

http://www.latinfinance.com http://www.LATINFINANCE.COM

LatinFinance - July/August 2014

Table of Contents for the Digital Edition of LatinFinance - July/August 2014