DB Identifies Value in Argentine Corporates

Argentine corporates, especially utilities, represent attractive opportunities for fixed income investors, according to Anne Milne, head of Deutsche Bank’s LatAm corporate bond research group. They are yielding 10%-13% and would likely rally, especially if there is good news on tariffs. “We could easily see them coming back down below 10%,” says Milne. She adds that Edenor and Transener have returned 15%-17%, while TGS has yielded 13%-14%. Her top picks for 2008 are Edenor and TGS. From a valuation perspective, Milne also likes some of the Mexican industrials yielding 10%-12%, like Vitro and Kuo. “They have definitely outperformed in the short term but more recently widened,” says Milne. The analyst recommends avoiding smaller Mexican homebuilders with no access to capital, such as Demet. Milne also dislikes IUSA, given the impact the US housing slowdown has had. She was speaking on a panel at EMTA’s annual meeting in New York.