LatinFinance - Special Edition - August 2013 - 24

cut appetite for risks like carry
trades.
“the main challenge will
be if the US is going to do a soft
Qe tapering, or if rates go up
quickly, since investors in these
markets focus on yield spread
differential and low fX volatility,” he says.
But carlos García moreno,
cfo of mexican telecom américa móvil tells LatinFinance he
expects more local issuance in
the company’s home market.
“there will be windows in
which you will not be able to issue, but things will reach a new
normalcy and a new stability,”
he says. “these local markets
are here to stay.”
Reforming for liquidity
chilean regulators have been
working to make the local currency market more liquid. the
Superintendencia de Valores y
Seguros allowed foreign issuers
to sell bonds in chile in 2006.
it took some time for offshore
borrowers to take advantage.
Still, the huaso market –
where foreign entities issue
local chilean peso-denominated bonds – has made some
progress. américa móvil was
first, selling a 4 million inflationlinked Uf ($225 million) fiveyear note in april 2009.
in 2011, chile instituted a
broader framework for international issuance into local
markets, opening the huaso
market as a possibility for latin
american countries that had
previously been excluded.
the legislation allowed issuers
based in countries with three
sovereign ratings and which
belong to the financial action
task force, an anti-laundering
standard setter, or an equivalent organization. nevertheless,
many international borrowers
have yet to take advantage of
the new terms, discouraged by
an unpredictable swap market.
Pending reforms in mexico
could push trading in pesodenominated debt and attract
further international invest-

local currency Deal of the Quarter century

América Móvil
Títulos de Crédito extranjero, 2012
américa móvil’s global 15 billion mexican peso ($1.2 billion) bond in november
2012 introduced a new structure, drawing domestic and foreign investors
into local currency notes. the structure mimics the seamless capability of the
mexican sovereign’s bonds to create liquid benchmarks with both local and
global buyers without the need for separate bonds or global depository notes.
one issuer, one curve. many local-currency sales have pushed envelopes in
the international area in terms of size and tenor in the last 15 years. However,
this innovation could change the game for the growing class of blue chip latam borrowers accessing global pools of liquidity. the 2022 senior unsecured
bond, known as Títulos de Crédito Extranjeros, are Securities and exchange
commission (Sec) and comisión nacional Bancaria y de Valores (cnBV) registered, denominated and settled in pesos. they trade on a fungible basis in the
international markets and mexico.
the títulos attracted more than 50 billion pesos in demand, with 80% coming
from foreign investors and 20% from latam, largely allocated to mexico accounts.
the dual-registration was important: registering the bonds only in mexico
would have stopped some international investors buying such bonds, while
selling them in the US, even in pesos, would have left many mexican investors
unable to buy or trade the bonds, says carlos García moreno, the telco’s chief
financial officer.
“the banking commission in mexico basically changed their requirement
such that if we already had certain securities listed, say in the US, the very
same securities could be listed in mexico,” he says.
already the structure has found followers: mexico’s televisa used the format
for its own issue in may. américa móvil, meanwhile, expects to reinstate quarterly re-openings of the títulos after skipping the second quarter of 2013.
“the notion is to reopen the títulos every quarter which was meant to give
investors a sense of liquidity, but with broad moves in rates the last thing investors want to hear about is new supply,” says García moreno. LF
ment. the market, meanwhile,
has come a long way since the
first mbono in 2000, and offers
both diverse investment options and a deep yield curve.
in Brazil, the government
bond market is liquid, but
corporate debt is less so, says
HSBc’s Remizov. the country
cut its 6% financial transactions
tax (iof) in June to attract more
foreign flows.
More sellers needed
a crucial factor in the development of local currency markets
for latin borrowers has been
the soaring rise of domestic savings, predominantly in pension
and insurance funds.
from 2000 to 2012, chilean
institutional investors’ assets
under management grew from
$60 billion equivalent to $250

24 l atinfina nce.com - 25 Years - August 2013

billion. that has been spurred
by higher earnings, more
people buying life insurance,
and chile’s overall economic
development, says Juan cristobal Peralta, syndication head
at Banchile citi. “We’ve seen
José olympio pereira

“The markeT
ThaT hasn’T
developed
yeT, ThaT we
would like To
see happen, is
a local capiTal markeT in
reais”

assets under management grow
five times and we’ve seen the
money invested in bonds grow
by 10 times,” he says.
Still, liquidity remains hampered by investors’ reluctance
to trade. “everyone wants to
buy, it’s hard to find people that
want to sell,” he says.
for their part, investors say
a greater offering of debt would
encourage liquidity. Peruvian
pension funds must invest 64%
of their funds domestically.
Roberto melzi, head of the fixed
income portfolio for Perubased pension fund manager
afP integra, says he would like
to see more corporates issuing bonds. Until that happens,
liquidity will be poor. “So i hope
to see more on the supply side,”
he says. “But that’s a wish, not a
view.” LF


http://LATINFINANCE.COM

LatinFinance - Special Edition - August 2013

Table of Contents for the Digital Edition of LatinFinance - Special Edition - August 2013

Latin Finance - Special Edition - August 2013
The Evolution of the Markets 1988-2013
The Future of Latin Finance
"Twenty-five Years Ago, LatinFinance Was Launched With One simple, if Well-worn, Belief: That Crisis Inevitably Gives Way to Opportunity"
Evolution of the Markets & Deals of the Quarter Century
Turnaround Time, for Some
Rising Champions
Locals Wanted
Gaining Pace
A Question of Depth
The Public-Private Balance
Cheaper Borrowing
Keeping It Simple
Local Banks Are Increasingly Stepping Up the Latin League Tables
LatinFinance Charts a Quarter Century of Change for the Biggest Banks in Latin America
LatinFinance Picks Out the Major Turning Points in the Region’s Political, Economic and Financial History Over the Past 25 Years
Governance & Reform
President, Mexico
Former President, Brazil
“the Government Has Not Given Up on What Is Fundamental. but When It Comes to Improving The Lives of Brazilians, There Are Signs It Has Started To Weaken"
Former President, Colombia
Opposition Leader, Venezuela
Former Us Treasury Secretary
Stability & Regulation
Governor, Bank of Mexico
“Latin America Did Very Well During the 2008 Crisis. but It’s Also True That a Lot of Ammunition Was Used”
Chairman, Grupo Financiero Banorte
Former Vice-Chairman, Citigroup
Partner, Cleary Gottlieb Steen & Hamilton
Former Governor, Central Bank of Brazil
Former Governor, Central Bank of Venezuela
Former Governor, Central Bank of Argentina
Professor of Economics, Columbia University
Corporates & Capital
CEO and co-CIO, Pimco
CEO, Gávea Investimentos
Founder, Celfin Capital
With Joyce Chang, Richard Frank, Hari Hariharan, Hans Humes, Will Landers, Mark Mobius and Martin Schubert
CEO, Itaú-Unibanco
CEO, Grupo Sura
Chairman, Santander
CFO, América MóVil
Former CEO, Vale
Chairman, Roubini Global Economics
Growth & Development
Former President, Chile
President, CAF
President, IDB
Former President, IDB
Former President, Caribbean Development Bank
President, Centennial Group Latin America
A Look Into the Future With Alternate Visions of Latin America a Quarter Century From Now
LatinFinance - Special Edition - August 2013 - Latin Finance - Special Edition - August 2013
LatinFinance - Special Edition - August 2013 - Cover2
LatinFinance - Special Edition - August 2013 - The Evolution of the Markets 1988-2013
LatinFinance - Special Edition - August 2013 - The Future of Latin Finance
LatinFinance - Special Edition - August 2013 - 3
LatinFinance - Special Edition - August 2013 - "Twenty-five Years Ago, LatinFinance Was Launched With One simple, if Well-worn, Belief: That Crisis Inevitably Gives Way to Opportunity"
LatinFinance - Special Edition - August 2013 - 5
LatinFinance - Special Edition - August 2013 - Evolution of the Markets & Deals of the Quarter Century
LatinFinance - Special Edition - August 2013 - 7
LatinFinance - Special Edition - August 2013 - Turnaround Time, for Some
LatinFinance - Special Edition - August 2013 - 9
LatinFinance - Special Edition - August 2013 - 10
LatinFinance - Special Edition - August 2013 - 11
LatinFinance - Special Edition - August 2013 - Rising Champions
LatinFinance - Special Edition - August 2013 - 13
LatinFinance - Special Edition - August 2013 - 14
LatinFinance - Special Edition - August 2013 - 15
LatinFinance - Special Edition - August 2013 - Locals Wanted
LatinFinance - Special Edition - August 2013 - 17
LatinFinance - Special Edition - August 2013 - Gaining Pace
LatinFinance - Special Edition - August 2013 - 19
LatinFinance - Special Edition - August 2013 - 20
LatinFinance - Special Edition - August 2013 - 21
LatinFinance - Special Edition - August 2013 - A Question of Depth
LatinFinance - Special Edition - August 2013 - 23
LatinFinance - Special Edition - August 2013 - 24
LatinFinance - Special Edition - August 2013 - 25
LatinFinance - Special Edition - August 2013 - The Public-Private Balance
LatinFinance - Special Edition - August 2013 - 27
LatinFinance - Special Edition - August 2013 - Cheaper Borrowing
LatinFinance - Special Edition - August 2013 - 29
LatinFinance - Special Edition - August 2013 - Keeping It Simple
LatinFinance - Special Edition - August 2013 - 31
LatinFinance - Special Edition - August 2013 - LatinFinance Charts a Quarter Century of Change for the Biggest Banks in Latin America
LatinFinance - Special Edition - August 2013 - G2
LatinFinance - Special Edition - August 2013 - G4
LatinFinance - Special Edition - August 2013 - G5
LatinFinance - Special Edition - August 2013 - 34
LatinFinance - Special Edition - August 2013 - 35
LatinFinance - Special Edition - August 2013 - 36
LatinFinance - Special Edition - August 2013 - 37
LatinFinance - Special Edition - August 2013 - 38
LatinFinance - Special Edition - August 2013 - 39
LatinFinance - Special Edition - August 2013 - 40
LatinFinance - Special Edition - August 2013 - 41
LatinFinance - Special Edition - August 2013 - 42
LatinFinance - Special Edition - August 2013 - 43
LatinFinance - Special Edition - August 2013 - 44
LatinFinance - Special Edition - August 2013 - 45
LatinFinance - Special Edition - August 2013 - 46
LatinFinance - Special Edition - August 2013 - 47
LatinFinance - Special Edition - August 2013 - Governance & Reform
LatinFinance - Special Edition - August 2013 - 49
LatinFinance - Special Edition - August 2013 - President, Mexico
LatinFinance - Special Edition - August 2013 - 51
LatinFinance - Special Edition - August 2013 - “the Government Has Not Given Up on What Is Fundamental. but When It Comes to Improving The Lives of Brazilians, There Are Signs It Has Started To Weaken"
LatinFinance - Special Edition - August 2013 - 53
LatinFinance - Special Edition - August 2013 - 54
LatinFinance - Special Edition - August 2013 - 55
LatinFinance - Special Edition - August 2013 - Former President, Colombia
LatinFinance - Special Edition - August 2013 - 57
LatinFinance - Special Edition - August 2013 - Opposition Leader, Venezuela
LatinFinance - Special Edition - August 2013 - 59
LatinFinance - Special Edition - August 2013 - Former Us Treasury Secretary
LatinFinance - Special Edition - August 2013 - 61
LatinFinance - Special Edition - August 2013 - Stability & Regulation
LatinFinance - Special Edition - August 2013 - Governor, Bank of Mexico
LatinFinance - Special Edition - August 2013 - 64
LatinFinance - Special Edition - August 2013 - B1
LatinFinance - Special Edition - August 2013 - B2
LatinFinance - Special Edition - August 2013 - 65
LatinFinance - Special Edition - August 2013 - Chairman, Grupo Financiero Banorte
LatinFinance - Special Edition - August 2013 - 67
LatinFinance - Special Edition - August 2013 - Former Vice-Chairman, Citigroup
LatinFinance - Special Edition - August 2013 - Partner, Cleary Gottlieb Steen & Hamilton
LatinFinance - Special Edition - August 2013 - Former Governor, Central Bank of Brazil
LatinFinance - Special Edition - August 2013 - Former Governor, Central Bank of Venezuela
LatinFinance - Special Edition - August 2013 - Former Governor, Central Bank of Argentina
LatinFinance - Special Edition - August 2013 - 73
LatinFinance - Special Edition - August 2013 - Professor of Economics, Columbia University
LatinFinance - Special Edition - August 2013 - Corporates & Capital
LatinFinance - Special Edition - August 2013 - CEO and co-CIO, Pimco
LatinFinance - Special Edition - August 2013 - 77
LatinFinance - Special Edition - August 2013 - 78
LatinFinance - Special Edition - August 2013 - 79
LatinFinance - Special Edition - August 2013 - CEO, Gávea Investimentos
LatinFinance - Special Edition - August 2013 - Founder, Celfin Capital
LatinFinance - Special Edition - August 2013 - With Joyce Chang, Richard Frank, Hari Hariharan, Hans Humes, Will Landers, Mark Mobius and Martin Schubert
LatinFinance - Special Edition - August 2013 - 83
LatinFinance - Special Edition - August 2013 - 84
LatinFinance - Special Edition - August 2013 - 85
LatinFinance - Special Edition - August 2013 - CEO, Itaú-Unibanco
LatinFinance - Special Edition - August 2013 - 87
LatinFinance - Special Edition - August 2013 - CEO, Grupo Sura
LatinFinance - Special Edition - August 2013 - Chairman, Santander
LatinFinance - Special Edition - August 2013 - CFO, América MóVil
LatinFinance - Special Edition - August 2013 - Former CEO, Vale
LatinFinance - Special Edition - August 2013 - Chairman, Roubini Global Economics
LatinFinance - Special Edition - August 2013 - Growth & Development
LatinFinance - Special Edition - August 2013 - Former President, Chile
LatinFinance - Special Edition - August 2013 - 95
LatinFinance - Special Edition - August 2013 - President, CAF
LatinFinance - Special Edition - August 2013 - 97
LatinFinance - Special Edition - August 2013 - President, IDB
LatinFinance - Special Edition - August 2013 - Former President, IDB
LatinFinance - Special Edition - August 2013 - Former President, Caribbean Development Bank
LatinFinance - Special Edition - August 2013 - 101
LatinFinance - Special Edition - August 2013 - President, Centennial Group Latin America
LatinFinance - Special Edition - August 2013 - 103
LatinFinance - Special Edition - August 2013 - A Look Into the Future With Alternate Visions of Latin America a Quarter Century From Now
LatinFinance - Special Edition - August 2013 - Cover3
LatinFinance - Special Edition - August 2013 - Cover4
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