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Policy

22 Oct 2018   Macro, Policy, Americas, Andes, Latin America

Rising Rates, Volatility Force Latin American Banks, Borrowers to Adapt to “New Normal”

Latin American economies are facing a range of complex challenges, both internal and external, as they power through the current election super-cycle – arguably the most significant in the region’s history. Bonds & Loans spoke to a number of Latin America-focussed debt capital markets bankers, rating agencies and law firms in the Americas to get a sense of the major themes and concerns that will dominate the agenda in coming months.

Will Weaker Currencies Help or Hinder EMs? It Depends

With an increasing number of column inches being devoted to the currency rout wreaking havoc on emerging markets, economists and investors suggest looking more closely at the interplay between bond yields, inflation dynamics and real effective exchange rates (REER) provide a better gage of which economies will struggle – and which might thrive – in the current environment.

Between The Spread Podcast: 2008 Financial Crisis - 10 Years On

In the exclusive new Bonds & Loans podcast we chat to Brad Tank, CIO of Neuberger Berman, on the aftermath of the biggest financial crisis the world faced in the past 30 years - and where the global markets are ten years on.

Cape Town Bolsters ESG, but What’s Green Today May Not Be Tomorrow

Cape Town is one of the few municipalities to have issued a green bond, a hugely successful transaction that generated significant oversubscription despite a challenging local market backdrop. We spoke with David Valentine, the Treasury Director and Janine Marion Abrahams, Head of Bank and Treasury Loans, Finance and Treasury Department at the City of Cape Town, about how it prepared for the transaction and why it chose to issue.

Brown Brothers Harriman: Emerging Markets Preview for the Week Ahead

We saw a significant EM positioning washout last week, with weak longs getting punished. Anyone lulled into jumping aboard the EM train recently is getting crushed by sharply higher US rates. ARS and BRL bucked the trend and gained last week, but all others were weaker and were led by ZAR, CLP, and COP. MSCI fell 4.5%, while EM bond yields surged. With US rates still marching higher, EM is likely to remain under pressure this week.

Fitch Ratings: ‘Nigeria growth outlook strong despite looming election’

Nigeria’s economy recorded better than expected private sector credit growth in the third quarter of this year, with more borrowers funnelling the proceeds towards CAPEX-related activities – despite next year’s federal election looming. We speak with Jan Friederich, a senior director at Fitch Ratings about lingering risks in the country.

Brazil: Dialogue with the Judiciary

There are plenty of examples of judicial activism in the world. The theme is old, but many specialists claim that it became more prominent in the post-World War II era, as a reaction to the inability of parliaments to curb infringement on individual rights.

Brown Brothers Harriman: Emerging Markets Preview for the Week Ahead

EM FX ended the week on a mixed note. For whatever reason, the major currencies took the brunt of the dollar’s rebound, with every currency down on the week except for CAD (+0.1%). EM FX was mixed on the week, with TRY, RUB, and ZAR able to carve out gains even as ARS and CZK fell. China is closed all week and so we may not see any trade-related headlines. However, China reported softer than expected PMI readings over the weekend that should keep markets nervous.

Off the Record: South Africa’s Benign Funding Environment a Boon for Some, Challenge for Others

With the October mini budget speech looming, South Africa’s economy and funding environment come sharply into focus; both remain in a precarious state. Analysts, investors, CFOs and Treasurers who spoke with Bonds & Loans on a recent research trip to the region emphasise that the way in which the macro environment evolves, and the way in which the government tackles key issues like land reform, will to a great extent dictate the country’s trajectory over the near, medium and long-term.

Off the Record: Banks in Russia – Shaken, not Stirred

The recent perturbations across EM assets, the looming shadow of current and potential new sanctions and subdued growth at home have taken a toll on the Russian financial sector. But prudent fiscal and monetary policies and timely actions to minimize sanctions impact have helped shelter banks operating in Russia and the CIS from serious damage, DCM bankers and corporate chiefs have told Bonds & Loans off record and on the ground in Moscow.

 

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