LatAm Banks Pick up the Slack: Brady (1)

While the availability of debt financing to LatAm from international sources has slowed, the region’s banks have picked up much of the slack, according to Nicholas Brady, former US Treasury Secretary. He adds that emerging markets are an important part of global resilience thanks to a combination of better policies and stronger economic performance. “Mexico will likely be the most affected by a slowdown in the US since approximately 90% of Mexico’s exports go to the US,” says Brady. “And if commodity prices go into a steep decline, this will affect those countries more dependent on commodities for economic growth, such as Brazil, Argentina, Peru, and Chile,” he adds. In addition, LatAm has no subprime mortgages, and the region’s banks stopped short of engaging in highly structured, over-leveraged deals. “Banking system reforms led to solid local banks driving credit expansion, but with better asset quality than that of the United States,” adds the official. One of Brady’s firm, Darby’s, portfolio companies in Colombia, which is seeking financing, received multiple offers from international banks nine months ago. While those banks have withdrawn their offers, the gap has been filled by Colombian banks that have committed to complete the transaction, he adds.