Latin Finance - November/December 2009 - 18

latam-china flows Meshing With China by Ben Miller W ith a capacity of 1,500 megawatts, the Coca Codo Sinclair hydroelectric dam will be expected on completion to supply about 70% of Ecuador’s electricity needs, potentially freeing it from needing to import power. After Ecuador stiffed international markets with a messy restructuring, raising almost $2 billion for the project straddling the Coca River near the Colombian border seemed a tall order. However, China has eagerly stepped in. “Four international companies bid, but only the two Chinese companies presented financing, and one of those withdrew, leaving Sinohydro,” says Italo Centenaro, general manager of Coca Codo Sinclair, the Ecuadorian government-owned project company. Sinohydro, China’s largest hydroelectric builder, signed a contract in early October to build the project and brought with it a $1.7 billion 15-year loan from the Export-Import Bank of China. The Chinese Exim loan has a 6.2% interest rate and comes with a five-year grace period, to match the expected construction time. Centenaro says it would have been difficult to get financing of that size from other multilateral banks. The Ecuadorian government will contribute the remaining $300 million. “The project is a priority for the Ecuadorian government,” says Wang Yinfu, deputy general manager at Sinohydro. “In the financial crisis [the government] would like contractors to help them get financing, and that’s exactly what we did for them.” He explains that although Ecuador might be one of the region’s smaller markets, his company has encountered fewer barriers to entry there than in others and found ready government support. Chinese global outbound FDI nearly As Chinese investment increases, LatAm tries to be more than just a cheap supplier of raw materials. Skeptics are wary of China’s track record in other regions. doubled from 2007 to 2008, when it reached $55.91 billion, notably during a time when FDI fell around the world. Estimates for the 2009 total run as high as $150 billion. The Sinohydro pact follows a July a separate $1 billion four-year credit. Similarly, China’s central bank granted Argentina – another LatAm sovereign shut out of international markets – a 70 billion yuan ($10.2 billion) three-year currency swap agreement in May, its first such agreement with a Latin American nation. The Ecuadorian agreements add to a growing list of LatAm-China fundings this year, highlighted by China Development Bank (CDB) loans of $10 billion to Brazil’s Petrobras and $1 billion to Mexico’s América Móvil, both signed in May, and $300 million for Brazil’s Telemar. They underscore an increasing thirst from China that is fuelled by a need for commodities. Many in LatAm see China’s insatiable demand for natural resources – specifically, oil, minerals like copper and lithium, and agricultural products – as underpinning the LatAm growth story of this decade. Some are worried about the longer term impact of China’s binge. Similarities with Africa, says Zhu agreement signed by Ecuador’s state-run oil firm, Petroecuador, to sell crude to China’s state-owned PetroChina, receiving in the first week of August an advance $1 billion payment. Under the deal, Petroecuador will export around 2.88 million barrels of crude oil per month for two years. In addition to the $1 billion advance, Quito is also negotiating with Beijing Africa II Wang sees great opportunity for Sinohydro in LatAm, particularly larger markets like Brazil and Colombia. However, it is not lost on observers that China has most leverage over those who are strapped for cash. The Asian nation has used this position of power, built on foreign reserves that reached $2.13 trillion at mid-year, according to China’s state administration of foreign exchange, to its advantage in procuring 18 LatinFinance November/December 2009

Latin Finance - November/December 2009

Table of Contents for the Digital Edition of Latin Finance - November/December 2009

Latin Finance - November/December 2009
Contents
Latam-China Flows
Petrobras Interview
Best Boutiques
Banks of the Year 2009
Itau Unibanco Interview
Mexico: How to Capitalize on Crisis
Colombia: Local Shop Repels Foreign Pretenders
Chile: Pefecting the Art of Retail
El Salvador: A Foreign-owned Bank Dominates
Infrastructure & Energy Awards
Private Equity Fundraising
Latin Finance - November/December 2009 - Latin Finance - November/December 2009
Latin Finance - November/December 2009 - Cover2
Latin Finance - November/December 2009 - Contents
Latin Finance - November/December 2009 - 2
Latin Finance - November/December 2009 - 3
Latin Finance - November/December 2009 - 4
Latin Finance - November/December 2009 - 5
Latin Finance - November/December 2009 - 6
Latin Finance - November/December 2009 - 7
Latin Finance - November/December 2009 - 8
Latin Finance - November/December 2009 - 9
Latin Finance - November/December 2009 - 10
Latin Finance - November/December 2009 - 11
Latin Finance - November/December 2009 - 12
Latin Finance - November/December 2009 - 13
Latin Finance - November/December 2009 - 14
Latin Finance - November/December 2009 - 15
Latin Finance - November/December 2009 - 16
Latin Finance - November/December 2009 - 17
Latin Finance - November/December 2009 - Latam-China Flows
Latin Finance - November/December 2009 - 19
Latin Finance - November/December 2009 - 20
Latin Finance - November/December 2009 - 21
Latin Finance - November/December 2009 - 22
Latin Finance - November/December 2009 - 23
Latin Finance - November/December 2009 - Petrobras Interview
Latin Finance - November/December 2009 - 25
Latin Finance - November/December 2009 - 26
Latin Finance - November/December 2009 - 27
Latin Finance - November/December 2009 - Best Boutiques
Latin Finance - November/December 2009 - 29
Latin Finance - November/December 2009 - 30
Latin Finance - November/December 2009 - 31
Latin Finance - November/December 2009 - Banks of the Year 2009
Latin Finance - November/December 2009 - 33
Latin Finance - November/December 2009 - 34
Latin Finance - November/December 2009 - Mexico: How to Capitalize on Crisis
Latin Finance - November/December 2009 - 36
Latin Finance - November/December 2009 - 37
Latin Finance - November/December 2009 - 38
Latin Finance - November/December 2009 - Colombia: Local Shop Repels Foreign Pretenders
Latin Finance - November/December 2009 - Chile: Pefecting the Art of Retail
Latin Finance - November/December 2009 - 41
Latin Finance - November/December 2009 - 42
Latin Finance - November/December 2009 - El Salvador: A Foreign-owned Bank Dominates
Latin Finance - November/December 2009 - 44
Latin Finance - November/December 2009 - 45
Latin Finance - November/December 2009 - 46
Latin Finance - November/December 2009 - 47
Latin Finance - November/December 2009 - 48
Latin Finance - November/December 2009 - 49
Latin Finance - November/December 2009 - Infrastructure & Energy Awards
Latin Finance - November/December 2009 - 51
Latin Finance - November/December 2009 - 52
Latin Finance - November/December 2009 - 53
Latin Finance - November/December 2009 - 54
Latin Finance - November/December 2009 - Private Equity Fundraising
Latin Finance - November/December 2009 - 56
Latin Finance - November/December 2009 - Cover3
Latin Finance - November/December 2009 - Cover4
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