LatinFinance - Special Edition - August 2013 - 90

2
THE
FUTURE
OF LATIN
FINANCE

Europe may be mired in crisis, but it still has a few things to teach Latin America when it comes to market development, says América Móvil’s chief financial
officer Carlos García Moreno. By Ben Miller

Carlos García Moreno
Lessons from the old world

hese days europe is rarely, if ever, held up as a role model when it comes to economic or financial matters – unless it’s to illustrate how things go wrong. and latin america
is only mentioned in that context as a useful historical parallel for how sovereign debt crises
typically unfold.
carlos García moreno, chief financial officer of américa móvil and former director of public credit at mexico’s finance ministry, takes a different view.
to him, the latin america of today bears many similarities to europe
in the early 1990s, and – leaving aside its sovereign debt crises – offers a
glimpse of how domestic financial markets could develop in the years
ahead.
Bank lending, as opposed to bond funding, was the only option for
european corporates for a long time.
“in 1990 or 1991 you didn’t have much of a capital market in Germany,” García moreno tells latinfinance. in Germany and in france,
five-year borrowing was available, but there were no benchmarks for
10-year funds. Just the UK had a benchmark that long. “You look at
what they have today, and it’s completely changed,” he says.
García moreno says the situation today in latin america is similar, in
terms of corporate borrowing. “You can’t go much beyond five years,
and it is open for triple-as locally, maybe double-as,” he says.
While the europeans perhaps started with a more diversified investor base, “we’ve seen what can happen in 20 years, and there are
parallels.”
“now you are seeing a situation in latin america where for a number of reasons bank lending is not available, and its incentivizing companies to think hard about other funding options,” says García moreno.
“to some extent it’s been a good thing, because it has forced more
companies to start looking at the capital markets.”
Mobilizing capital
latin america has a growing number of strong corporates in need of
funds, but, by and large, limited in their domestic currency to deals of
five to seven years in tenor. meanwhile, the region boasts an unprecedented pool of capital in the pension funds of chile, colombia, mexico and Peru and with
asset managers in Brazil.
mexico’s local financing markets have come a long way since García moreno was head of
public credit under ernesto Zedillo’s administration in the late 1990s. Back then, it was an

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

effort to get investors to buy fixed-rate pesodenominated sovereign bonds at three and
five-year maturities. the sovereign’s local
curve is now a model for the region, but
the peso options for mexico’s corporates
are limited to a few national issuers – just as
local currency options are limited in chile,
colombia and Brazil.
maintaining macroeconomic stability
will be critical to allowing institutions to
make bigger pools of liquidity available.
in the past decade, américa móvil has
pioneered issuances in the international
markets: in 2005 it sold a $1 billion 30-year

GET IT WHILE IT LASTS: Borrowers must
take advantage of market openings while
they have them, says América Móvil CFO
Carlos García Moreno

http://LATINFINANCE.COM

LatinFinance - Special Edition - August 2013

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