Latin Finance - September/October 2009 - 60

Caribbean corporate finance Credit Demand Slump by Taina Rosa s financing from private banks became more expensive, multilaterals, especially the IFC, have stepped up to bat and extended credit to the Caribbean region’s private sector. Nevertheless, as risk aversion slowly subdues and bond markets show signs of opening up, the outlook looks has gone through a tremendous look in the mirror in trying to slightly brighter. determine how to cut costs,” Clark says. “That is probably the “The financial crisis has been weighing on the Caribbean main reason why lenders are doing less in the Caribbean this in extreme form,” says Wendell Mottley, managing director year,” he adds. at Credit Suisse. “There was a withdrawal of capital for the “Companies have gotten more conservative, wanting to whole Latin America and Caribbean region in the early stage maintain their financial flexibility,” says Edward Sánchez, of the crisis. No net debt flew back into the region for some Citi’s managing director for corporate and investment banking time,” adds Mottley, who covers the in the Caribbean and Central Caribbean. America. “We have seen clients IFC Committed Caribbean Portfolio Loan volume as of late July in pulling back on their capex and Infrastructure gets most support the Caribbean was down by almost expansion plans.” Total loan Health & half compared to the same period volume is slightly down from Education of 2008. Dealogic data shows 2008 across the financial sector (1%) that as of July 28, only four loans in Central America and the Global worth $185.8 million had been Caribbean, he adds, without Manufacturing announced. In the same period giving specific figures. (26%) Infrastructure of 2008, nine loans worth $1.7 “Over the last 12 months this (37%) billion had been made public in has become a lenders’ market,” the Caribbean alone, including says Clark. He notes that corporate and sovereign loans. borrowers had the upper hand The trend is similar for LatAm, from 2004 until the downturn where volume dropped to 48 loans began. “That has turned and the worth $18.7 billion as of July 28, Oil, Gas and Mining (1%) cost of liquidity has forced banks Financial Agriculture (1%) from 103 loans worth $27.4 billion to consider that cost. There are Markets (35%) in 2008, according to Dealogic. fewer lenders, which also pushes In Trinidad & Tobago, for Source: IFC the price up,” he adds. example, credit growth to the “Generally, there has been private sector has slowed significantly to about 1% in the first a 100-500 basis points increase in the cost of liquidity in some half of 2009 from about 19% in the first half of 2008, says places in the English speaking Caribbean,” Clark adds. Suresh Sookoo, CEO of RBTT Bank. The drop is not necessarily For instance, in 2005 Air Jamaica issued a $200 million 2015 attributable to a lack of financing, but instead “to a flattening bond at 9.375% that now yields 11.000%. In 2007 the airline in loan demand as consumer spending and the private sector issued a $125 million in 2027 bonds at 8.125% that now yield slows down,” Sookoo adds. 11.500%. Kevin Clark, senior vice president of international corporate “Barbados probably has had less volatility in credit spreads and commercial banking at Scotiabank, agrees. “It is not on the basis that demand has been relatively even,” adds Clark. because the bank does not want to lend, it is because the On the other hand, he notes that “the Dominican Republic has markets have moved. The big users of capital in the English probably one of the largest increases in average margin cost to speaking Caribbean like the construction and hospitality sectors the borrower.” This is explained partly by the fact that while need to determine how to save cash. The hospitality sector Barbados is an investment grade country, rated BBB by S&P, the A Loans to Caribbean companies for the first seven months have dropped by around 50% compared to the same period in 2008. Demand and supply remain weak. 60 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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