LatinFinance - Special Edition - August 2013 - 81

What’s required, he says, is for the government to bring the inflation rate down
to its 4.5% target. at the same time, there
needs to be more fiscal discipline and a focus on addressing supply-side bottlenecks.
“it is important for Brazil to at least stabilize
the ratio of government expenditure to
GDP,” he says.
Not so bad
fraga, who as central bank governor
from 1999 to 2002 saw Brazil successfully
through a financial crisis, says pessimism
today towards the country is justified – but
must be kept in perspective.
“the mood is negative and there’s reason for it to be negative,” he says. “But you
also have to keep in mind that in 2010 the
mood was probably unjustifiably optimistic
as well.”
ARMINIO FRAGA

“The mood is negaTive and There’s
reason for iT To be
negaTive. buT you
also have To keep
in mind ThaT in 2010
The mood was probably unjusTifiably
opTimisTic”
He says that today’s downturn is not bad
enough “to characterize a longer, deeper
dive into trouble as we had in the 1980s in
particular. i don’t think we’re anywhere
near that. We’d have to really continue on
the wrong path for much longer for us to go
back to those days.”
“We just need to be cautious of how bad
it was back then in order for us to avoid
repeating those mistakes,” he says.
Brazil’s 2013 street protests emerged
from a popular campaign against bus fare
increases. But the price of transportation is
just one example of the challenges Brazilians face on a daily basis. “Recent events
– protests and the troubles with infrastructure – all suggest that uncertainty will be
here for a while,” fraga says. “this tends to
dampen the animal spirits.”
Yet fraga is nevertheless hopeful that
Brazil’s economy can be put right. “Sometimes the fear factor kicks in and allows
things to happen,” he says. “it’s never easy,
but it can be done.” LF

The growth of private pension funds in latin america has been the
single most significant development for the region’s capital markets, says celfin captial founder jorge errázuriz

jorge errázuriz
The birth of a market
We started celfin from nothing in 1988.
With Salomon Brothers, we listed the first
latin american country fund on the new
York Stock exchange. the new York exchange and the latin american ones were
totally separate at that time. So what we
did was revolutionary in creating the chile
country fund – a closed fund that exists to
this day – that invested in chilean shares.
that was the first international connection between the nYSe and the chilean
stock exchange. our next step was in 1990,
when we listed the first latin american
company on the nYSe through an american Depositary Receipt format.
there hadn’t been any latin american
company listing on the nYSe since the
1960s. it was for the telephone company.
today it’s telefónica, but at the time it was
part of an australian company called Bond.
they needed to raise at least $50 million. We’re talking about a sum that today
seems pretty small. it needed $50 million
for investment projects, and the controlling shareholder wasn’t allowed to put the
money in because there was a limit.
But in chile it was impossible to do a $50
million listing in 1990. So that led on to the
idea of listing on the nYSe, which meant
changing the law and working on issues
such as capital gains tax.
from there, a whole wave of capital
inflows started. in chile’s case, many
more companies listed on the new York
exchange. and then there were colombian,
Peruvian and Brazilian firms that used the
aDR format. Since then everything has
changed. in chile it’s possible to raise $500
million, to do $1 billion, where the international placement is marginal – it could
be 20% – where the pricing is local, where
the liquidity is local, where international
accounts invest directly in chile and where,
most importantly, the savings are in latin
america.
in 1990 we looked to new York and
london as sources of capital. today we can

look internally, at chile, Peru, colombia
and Brazil. there’s a lot of long-term capital, coming from pension funds that are
able to finance local investment projects,
capital raisings and bond issues.
and now we are integrating latin
america’s financial markets. that raises
the question as to whether the north
american investment banks are needed
any more. the truth is they’re not: they are
complementary. that’s where the tie-up
between celfin and BtG Pactual came
from. We have integrated with them creating a latin american investment bank, for
latin america, with the ability to sell bonds
in latin america, in the US, in europe and
in asia. an integrated bond and equity
market is starting to be built. What’s still
needed is an instrument to be offered publicly – a bond, a share, or another security –
that can be sold in chile, and automatically
registered as a public offering in the other
markets. that’s what we are going to move
forward, with the authorities, and with
other stakeholders.
the next step is financial integration of
the latin american capital markets. What’s
needed is greater homogenization of the accounting and tax rules as well as the custodial processes. if in one country they settle
in t plus two days, then everyone needs to
have the same rules. So if another settles in
t plus three, then it’s a problem.
We need the same playing field. intuitively, it’s logical and simple: the same ball,
the same rules. the difficulty comes when
there are differences in the tax rules, which
complicates things because that requires
government and parliamentary input. But
if there is political will, then this project
to integrate our bond and equity markets
will go forward. and there is political will
among these four countries. LF
Jorge Errázuriz is vice-president of BTG
Pactual Chile. He was interviewed by Katie
Llanos-Small.
August 2013 - 25 Years - l atinfina nce.com 81


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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