Latin Finance - November/December 2009 - 20

latam-china flows speaking about the oil sector. “Working with those companies we could have some interesting financing packages, as we do with other companies in other parts of the world,” such as Africa, he adds. Who’s Coming to Play? The possible Chinese participants in the region are many but Beijing is the most important player. The list of entities includes policy banks, sovereign wealth funds, commercial banks, and stateowned enterprises, all with ties to the government, as well as larger private companies. “We want to be an international oil services company, so we are looking for any opportunities,” says Chen Weidong, executive vice president of oilfield services provider China Oilfield Services (COSL), which has Pemex contracts in the Gulf of Mexico. “There are multiple ways into a new country. M&A is one of the ways. We can go there by M&A, by joint venture, by having local partnerships. We are very flexible.” COSL is looking to expand beyond the Gulf, though Chen adds that the company needs a better understanding of how oil services markets work in the different countries. At first, it plans to follow exploration activity offering contracts, but Chen notes that M&A is an important way to enter new markets. Last year COSL spent about $2.5 billion on purchasing Norwegian oil services provider Awilco to gain access to new markets. So far most of the M&A activity has been in the materials sector. China’s Wuhan Iron & Steel offered in June to buy a 9.1% stake in Brazilian miner MMX for $120 million, through the purchase of new shares. The terms of the deal would allow Wuhan to acquire a 23% stake in MMX subsidiary MMX Sudeste, also through a new share placement, for $280 million. The companies would also simultaneously negotiate a long-term offtake agreement for the supply of iron ore by MMX Sudeste to Wuhan. The companies had not yet announced any agreement as of early October. Also in October, Baosteel, China’s largest producer, tabled a proposal to pay £1 billion for a 30% stake in Anglo American’s Minas Rio iron ore mine in Brazil. In August, agricultural and chemicals company Sinochem agreed to acquire UK-listed Emerald Energy for ₤532.1 million, giving it Emerald’s 10 oilfields in Colombia. Hugo Chávez announced in September that China plans to invest $16 billion over the next three years to develop oil reserves in Venezuela’s eastern Orinoco basin, a deal which PDVSA was hoping to finalize in October. This is the latest in a series of agreements between the two countries, including an energy co-operation agreement earlier in the year, under which China is putting $6 billion into a bilateral development fund. equity fund following the MSCI index, though the fund is overweight Latin America. Lu says there could be fixedincome investment in LatAm in the future. Alazraki says that Pemex wants to include more Chinese investors in its bond deals, and other issuers are heard keen to do the same. “Investor expectations are high, with booming Chinese domestic growth,” Lu says, noting a strong preference among retail for domestic Chinese stocks. China Loan Boom Learning from prior errors: Fang China’s CIC sovereign wealth fund in September agreed to invest $850 million in Hong Kong-based Noble Group, giving it access to a concentration of agricultural assets in Brazil, Uruguay and Argentina. Infrastructure investment is following. In July, Venezuela’s government signed a contract with China Railway Engineering for the construction of a $7.5 billion line joining the states of Guarico, Aragua, Anzoategui and Cojedes. Chinese asset managers have not yet joined the LatAm wave. In 2007, China allowed its funds to invest overseas, permitting four entities to raise $15 billion for foreign purchases. The largest, China AMC raised $4 billion in two days from domestic investors, says AMC portfolio manager Jeff Lu. Despite this enthusiasm, Lu explains that LatAm is a small part of his global The América Móvil, Petrobras and Coca Codo Sinclair facilities will funnel at least $12.7 billion in Chinese cash to Latin borrowers this year. In 2008, the total reached $1.84 billion, according to Dealogic. That total includes a $200 million MLA role for the China Development Bank (CDB) in PDVSA’s $1.16 billion one-year revolving credit facility in 2008 via BNP Paribas. Thus far the CDB and the other government policy bank, China Exim, have represented most of the Chinese risk-taking in LatAm. Bank of China, one of the country’s four large state-controlled banks, appears next in line, having taken small tickets in syndicated loans for Vale and Odebrecht in 2007 and 2008, according to Dealogic. As this group of lenders – which also includes Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank (CCB) – becomes more comfortable with LatAm risk, it should also boost lending. “We follow our customers, and we see them going into the region,” says John Weinshank, senior vice president at CCB’s recently expanded New York office. Weinshank adds that CCB is managing some flows between LatAm and China by issuing letters of credit, but has not yet taken LatAm risk. This is under study, as he says the next step would be to eventually support LatAm companies or their clients’ projects in the region directly. A branch office in the region could someday be a possibility. Earlier this year, CDB announced plans to open a Rio de Janeiro office in 2010. Apolitical and Hungry CDB’s loans to the likes of Petrobras and América Móvil also help undermine 20 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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