LatinFinance - Special Edition - August 2013 - 69

chief among his worries is the impact of
a slowing chinese economy, which Rhodes
says has long been a tailwind for latin
growth. “there’s no doubt that double-digit
growth in china is gone, we’re not going to
see that again. the question is where is it
going to level off?”
While china’s authorities expect a 7.5%
growth rate in 2013, a growing number of
analysts reckon that its rate of expansion
will drop significantly over the long-term as
the country’s growth model changes. “over
the longer-run they’re going to have a tough
time to keep to 7%,” says Rhodes.
the implications for commodities trade
will be significant, he says. “there’s no
doubt that there will not be the volume of
commodities imports by china as there was
with double-digit growth,” he says. “that
WILLIAM RHODES

“Just BecAuse LAtin
AmericA didn’t fALL
into some of the
pitfALLs of the
europeAns And us
in the GreAt recession, it doesn’t
meAn it’s not GoinG
to Be A chALLenGinG
worLd”
has had and will continue to have an impact
on latin america.”
He also points to the much-publicized
risks of tighter money, as developed world
interest rates ultimately rise. “eventually
interest rates are going to rise and it’s going
to have its implications – across the board.
Just like when Qe was introduced and it had
an impact on emerging market currencies,
we will see the reverse, that’s inevitable. it’s
just inevitable that there will be some effect
on latin america.”
Yet the combined effects of these two
challenges need not be disastrous for the
region, Rhodes insists. “latin america can’t
sit back and say ‘we are emerging from this
and we don’t have any problems’,” he says.
“they should take the opportunity from
crises elsewhere and move ahead with
structural reforms and deregulation and to
build institutions. this will be key.” lf

2
THE
FUTURE
OF LATIN
FINANCE

Latin America must not forget the lessons it has
taught the world about restructuring, says sovereign
debt veteran Lee Buchheit. By Ben Miller

Lee Buchheit
Back to reality
for years, latin america looked on as the
eurozone stumbled under the weight of
its debt. Some in the region even allowed
themselves a hint of schadenfreude.
But, according to lee Buchheit, partner
at cleary Gottlieb Steen & Hamilton and a
veteran of sovereign debt restructurings,
that could soon change.
latin america, he says, is vulnerable
to a change in both commodity prices
and US interest rates. Both are poised to
change – and in a manner not to the region’s
advantage.
With mexico’s Brady bond agreement in
1989, latin america reminded the world
the first lesson about sovereign debt: that
it could be restructured. “everyone knew
that a bank loan could be restructured, but
a sovereign bond hadn’t been restructured
since the 1930s and 1940s,” says Buchheit.
“the dearth of restructuring over the last
five years in emerging markets generally
has been a happy product of historically
low interest rates and historically high
commodity prices. When you get those two
things it provides relief for countries that
otherwise might have been the object of
concern.”
the US federal Reserve has indicated
it will pare back its extraordinary stimulus measures, as a prelude to eventually
normalizing monetary policy. meanwhile,
commodity prices are dropping from
record highs and growth is slowing across
the region.
“if you have a significant drop in commodity prices and a significant rise in interest rates, it would begin to show some of
the strains on those economies,” says Buchheit. Stronger reserves, the development of
local capital markets, and macroeconomic
reforms, have helped many – but not all.
the coming years may bring further
strains to the region – for large and small
economies alike, Buchheit says. caribbean
nations have not benefitted as much from

lower US interest rates and the commodity
boom.
“the debt situation for many of these
countries remains very fragile,” Buchheit
says, pointing to Belize, Grenada and
Jamaica, which just completed its second
restructuring in four years.
Lessons not learned
as markets enter a new phase of uncertainty, latin american borrowers can
draw from their experiences in the 1980s
and 1990s.
in contrast, european countries battling
with huge debts could themselves have
learned from latin america, says Buchheit, “but they have not paid attention.”
“What you have seen in europe is a prevailing belief – at the higher levels of policy
makers – that sovereign debt restructuring
is a unique affliction of emerging markets,
and to worry about it, or do it, is to declare
yourself emerging,” he says.
in the 1980s the official sector wouldn’t
lend a country like mexico money to pay
debt with commercial banks. Sovereign
borrowers were told instead to reschedule. in europe, the formula has been
very different. “they have elected in
every case, except for the belated Greek
restructuring, to lend these countries all
the money they need to repay in full and
on time their bonds,” he says, referring
to bailout packages for ireland and Portugal from the european central Bank,
european Union, and the imf. in Greece’s
debt restructuring, private creditors were
persuaded to take haircuts.
“the debt stocks have migrated out of
the hands of the private sector lenders on
to the shoulders of european taxpayers.
they are only now beginning to realize the
consequence of that – that if a more savage
form of restructuring is required, the axe
is going to fall on the neck of the official
sector.” LF
August 2013 - 25 Years - l atinfina nce.com 69


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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