Latin Finance - September/October 2009 - 18

investment banking survey veteran Merrill Lynch rainmakers in sales, trading and investment banking. But BofA Merrill executives claim to be entering a new phase marked by some Universal Banking stability. And competitors, including a Citi’s local branches across the region, as senior investment banking executive at well as a broader suite of non-investment an established competing universal bank, banking products for corporations allow believe it could give Citi and JPMorgan a it claim to the term “universal bank.” run for their money in LatAm. Unlike JPMorgan, whose use of balance By matching sophisticated investment sheet tends to be directly linked to other banking products with balance sheet and investment banking products, Citi extends lower risk financial services, the goal is loans in exchange for services like cash to be better positioned to capture a larger management, for example. Despite lack portion of the business coming from any of glamour, these can generate healthy, one client, says James Quigley, president stable returns for the bank, says a senior of LatAm at BofA Merrill. As a result, his Citi official. institution must be selective in picking That does not mean it will not employ clients, he adds. an integrated investment banking “We would be inclined to extend approach. On the contrary, DCM, liquidity to clients where there is a which covers Mexico, Central America, multiplicity of contact points to the Caribbean and South America, has broader organization,” says Quigley. “We benefitted tremendously from access to a will not thoughtlessly throw [our balance balance sheet, as have ECM and M&A. sheet] around hoping to get clients,” he The third potential full service adds. player in the region is BofA Merrill. The Balance sheet may help the company shop has undergone a rocky transition win bond, equity and M&A mandates, marred by the departure of dozens of as well as to become a regular banker when we have a crisis and people tend to pull back. We’re here for the long term,” says Aguzin. of big borrowers like Vale. The latter’s management have stated that they prefer to work with banks that support them in their day to day activities, as opposed to those who only show up for a complex, high fee yielding deal. Despite staff defections, BofA Merrill appears to have maintained a unified front in equity, particularly for Brazil sales and trading. Will Landers, who manages LatAm equity funds worth $6 billion at BlackRock, says Merrill has either retained its most important talent, or managed to fill missing positions with equally competent rising juniors. He points to Brazil equities analyst Pedro Martins, and Mexico-based real estate analyst Carlos Pereylongue as two examples. “My top two banks for research and trading have been Merrill Lynch and Santander,” says Landers, noting the amount of new sellside shops looking to service investors in LatAm has surged in the past year. He notes both BofA Merrill and Santander provide reliable trading, structuring and execution for more complex trades. Weighed by Balance Sheet alance sheet is essential during crisis, when liquidity is tightly held and some corporate clients are desperate for funds. But it has its downside. For example, selective lender JPMorgan was in August mired in complex renegotiation of terms on a $475 million bilateral facility provided to Magnesita, the Brazilian refractory materials producer, to acquire Germany’s LWB. Soon after the acquisition closed, Ebitda tanked amid a cyclical and crisis-aggravated industry downturn, causing it to trip leverage covenants. JPMorgan also dodged a bullet in the fourth quarter of 2008 when it was able to let a $1.7 billion bridge commitment to Votorantim Papel e Celulose (VCP) expire. VCP’s bid for Aracruz, which the loan was destined to support, was put on ice following a $2.1 billion derivatives related writedown at Aracruz. Had the bank extended the line, it would have been costly to hold and even tougher to syndicate. Meanwhile, balance sheet players Citi, BBVA, Santander, RBS, HSBC and BNP were leading creditors to Cemex, which has spent most of the past year entangled in arduous renegotiations of $15 billion in bank loans. More than $1 billion is heard to be sitting on the books of Citi alone. The refinancing was finally approved in mid-August with an agreement by lenders to roll over their credit to the borrower by up to five years. But managing the process has been a time consuming and relatively thankless exercise, though Cemex, once LatAm’s most sought after corporate client, surely appreciates the effort and will likely reward leading lenders with more lucrative business in short order, including mandates for an equity follow-on. It remains to be seen how Bank of America-Merrill Lynch deploys its balance sheet in the region. It may choose to act like JPMorgan, more of a pure-play investment bank, offering loans only as a complement to M&A or a precursor to a bond. Or it could employ more of a full service approach like Citi, lending in a broader range of situations in the hope of drawing more business. Patricia del Grande, head of corporate banking for the Americas at BofA-Merrill says in addition to treasury services, secured dollar lending and eventually local currency loans are on the menu for Brazil. “I see opportunity in global trade finance, particularly for Brazilian companies, given their growth profile and the diversification of their exports,” she tells LatinFinance. The country’s large exporters, like Vale, Gerdau, Votorantim, Usiminas, CSN, and Braskem – whose activities in the domestic and cross border markets create needs ranging from FX swaps, trade-related lending and cross border financing – likely fall within the bank’s target list of clients. -- Dan Shirai B 18 LatinFinance September/October 2009

Latin Finance - September/October 2009

Table of Contents for the Digital Edition of Latin Finance - September/October 2009

Latin Finance - September/October 2009
Contents
Investment Banking Survey
Who Said That?
OTPP Investment Strategy
Central Bank Scorecards
Brazil Liability Management
Real Estate Equity Resurrected
Structured Finance Forecasts
Grim Outlook. Reform Required
Banorte Seeks to Grow
Peru Spending Hits a Block
BCP Sees Better Days
Caribbean Investment Report
Sustainable Banking
Legal Services Survey
Parting Shot
Latin Finance - September/October 2009 - Latin Finance - September/October 2009
Latin Finance - September/October 2009 - Cover2
Latin Finance - September/October 2009 - Contents
Latin Finance - September/October 2009 - 2
Latin Finance - September/October 2009 - 3
Latin Finance - September/October 2009 - 4
Latin Finance - September/October 2009 - 5
Latin Finance - September/October 2009 - 6
Latin Finance - September/October 2009 - 7
Latin Finance - September/October 2009 - 8
Latin Finance - September/October 2009 - 9
Latin Finance - September/October 2009 - 10
Latin Finance - September/October 2009 - 11
Latin Finance - September/October 2009 - 12
Latin Finance - September/October 2009 - 13
Latin Finance - September/October 2009 - Investment Banking Survey
Latin Finance - September/October 2009 - Who Said That?
Latin Finance - September/October 2009 - 16
Latin Finance - September/October 2009 - 17
Latin Finance - September/October 2009 - 18
Latin Finance - September/October 2009 - 19
Latin Finance - September/October 2009 - 20
Latin Finance - September/October 2009 - 21
Latin Finance - September/October 2009 - 22
Latin Finance - September/October 2009 - OTPP Investment Strategy
Latin Finance - September/October 2009 - 24
Latin Finance - September/October 2009 - 25
Latin Finance - September/October 2009 - Central Bank Scorecards
Latin Finance - September/October 2009 - 27
Latin Finance - September/October 2009 - 28
Latin Finance - September/October 2009 - Brazil Liability Management
Latin Finance - September/October 2009 - Real Estate Equity Resurrected
Latin Finance - September/October 2009 - 31
Latin Finance - September/October 2009 - 32
Latin Finance - September/October 2009 - 33
Latin Finance - September/October 2009 - 34
Latin Finance - September/October 2009 - 35
Latin Finance - September/October 2009 - 36
Latin Finance - September/October 2009 - Structured Finance Forecasts
Latin Finance - September/October 2009 - 38
Latin Finance - September/October 2009 - Grim Outlook. Reform Required
Latin Finance - September/October 2009 - 40
Latin Finance - September/October 2009 - 41
Latin Finance - September/October 2009 - 42
Latin Finance - September/October 2009 - 43
Latin Finance - September/October 2009 - 44
Latin Finance - September/October 2009 - Banorte Seeks to Grow
Latin Finance - September/October 2009 - Peru Spending Hits a Block
Latin Finance - September/October 2009 - 47
Latin Finance - September/October 2009 - 48
Latin Finance - September/October 2009 - 49
Latin Finance - September/October 2009 - BCP Sees Better Days
Latin Finance - September/October 2009 - 51
Latin Finance - September/October 2009 - 52
Latin Finance - September/October 2009 - 53
Latin Finance - September/October 2009 - 54
Latin Finance - September/October 2009 - Caribbean Investment Report
Latin Finance - September/October 2009 - 56
Latin Finance - September/October 2009 - 57
Latin Finance - September/October 2009 - 58
Latin Finance - September/October 2009 - 59
Latin Finance - September/October 2009 - 60
Latin Finance - September/October 2009 - 61
Latin Finance - September/October 2009 - 62
Latin Finance - September/October 2009 - 63
Latin Finance - September/October 2009 - 64
Latin Finance - September/October 2009 - 65
Latin Finance - September/October 2009 - 66
Latin Finance - September/October 2009 - Sustainable Banking
Latin Finance - September/October 2009 - 68
Latin Finance - September/October 2009 - Legal Services Survey
Latin Finance - September/October 2009 - 70
Latin Finance - September/October 2009 - 71
Latin Finance - September/October 2009 - 72
Latin Finance - September/October 2009 - 73
Latin Finance - September/October 2009 - 74
Latin Finance - September/October 2009 - 75
Latin Finance - September/October 2009 - 76
Latin Finance - September/October 2009 - 77
Latin Finance - September/October 2009 - 78
Latin Finance - September/October 2009 - Parting Shot
Latin Finance - September/October 2009 - 80
Latin Finance - September/October 2009 - Cover3
Latin Finance - September/October 2009 - Cover4
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