A decline in EM risk perception has seen bond prices rally and a steady stream of new issuance from LatAm. The list of potential followers is long, but as of mid-June it appeared few were ready to jump before the summer hiatus. There is still a big question as to whether anything but blue chips could issue.
Category: 2009
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EQUITY: VisaNet Draws Global Buyers
A flurry of offerings that could be worth upwards of 12 billion reais has gripped Brazil, whose stock market rose 40% in the first five months. Increasingly liquid dedicated investors stand ready to jump back into new issues provided they are large and liquid. Even Mexico and Chile are starting to see signs of life.
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M&A: China Mining Deal Flops
What was potentially the largest M&A deal of the year for LatAm – Chinalco’s acquisition of Rio Tinto assets including part of Chile’s Escondida copper mine – fell apart in June, taking 10% of volume with it. As part of the deal, Rio Tinto would have sold to Chinalco a 15% interest in the Escondida copper mine for $3.4 billion and a 30% stake in the La Granja copper mine in Peru for $50 million.
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STRUCTURED FINANCE: Afores Harvest AGSA Clones
A successful 1.65 billion peso teak tree securitization by Mexican grower AGSA in July 2008 has sprouted a host of local ABS imitators. As of mid-June, deals from the homebuilding, restaurants and private equity (PE) sectors, were en route.
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LatAm Private Equity: Eye on the Prize
It is far from smooth sailing for private equity cash raising. But funds are not pulling out of LatAm, which is more attractive than other regions.
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Private Banking: Brazil Locals Ascend
Brazilian institutions aim to capitalize on international competitors’ woes by seizing private bank market share. High net worth clients are repatriating funds but staying cautious.
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BNDES: Market Savior or Inhibitor?
The BNDES provides critical long-term and affordable funds in severe market stress. It insists that a flood of subsidized money complements, rather than crowds out, the private sector.
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Ecuador Mining: Sovereign Gold Lining
Ecuador may be exiled from capital markets for years by an aggressive debt restructuring, but the government hopes to attract mining dollars. It faces an uphill struggle.
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Trade Finance: China Weighs
Multilaterals, ECAs and China are covering for traditional providers of trade finance, who are expected to deploy less this year. However, commercial banks are poised to jump back in.
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Eike Batista Pushes Brazil Infrastructure
Eike Batista is rolling out a jumbo infrastructure-focused private equity fund to support his businesses. A major new Brazilian shipping hub is also in the works.