Bonds & Loans speaks with Arthur Rubin, Head of Latin America DCM, SMBC Nikko Securities America, Inc. at the Bonds, Loans & Derivatives Andes 2017 conference about the macro-economic risks facing the Andean region, and the credit market outlook in 2017.
The concern over high interest rates in Brazil is understandable. It impacts the public coffers in favour of the richest and discourages productive investment. Many analysts argue that the interest rate is too high, and that the main reason for its inaction is pressure from special interest groups, notably the financial market. Although this argument is seductive for its simplicity, it does not jibe with the complexity of the theme.
The Odebrecht scandal could be a game changer for corporate governance in Latin America, with investors demanding more transparency in the way the region does business.
Inflation targets are widely used by Central Banks throughout the world. In countries with moderate inflation, this regime helps keep inflation well behaved, with less cost to economic activity. In countries with low inflation, the risk of deflation can be mitigated by setting a suitable target. This targeting also makes monetary policy more predictable, contributing to a stable economic environment, but defining an ideal target is an imperfect science at best.
Mexico seems set on becoming a sustainable finance leader, but a lack of information and clear-cut regulations, and an increasingly volatile peso, seem to be holding potential green bond issuers back.
Engineered by Goldman Sachs, this first-of-a-kind multi-tranche dual-currency hybrid financing package for the Pacifico 3 highway became the first UVR-denominated issuance in the world and marks a new era in Colombia’s infrastructure PPP financing.
Few currencies have suffered more since the surprise election of Donald Trump last year than the Mexican peso. Trump made Mexico a cornerstone of his electoral campaign and attacked the Central American country on a number of issues ranging from illegal immigration to the renegotiation of the North American Trade Agreement (NAFTA), which put increasing pressure on the country’s currency and drove the country’s Central Bank to take drastic measures. Will the gambit pay off?
Bancolombia’s green bond was the first green bond issued by a private financial institution in Latin America and the first green bond in Colombia, potentially opening the market to a slew of local currency-denominated issuances.
In April 2016 pan-American conglomerate Grupo de Inversiones Suramericana S.A. followed up its record-breaking 2011 bond with a US$550mn issuance, which was used to repay a bridge loan posted a month earlier and fund the acquisition of RSA’s Latin American operations.
Many Latin American countries are looking to bolster their capital markets and make them more accessible to foreign investors lured to the region in search for higher returns, with clearing and settlement platforms playing a starring role.
- Argentina: Concerns of Overleveraging in Dollars Gaining Pace
- Between the Spread: Market Intervention and its Side Effects in Brazil
- How the U.S. Presidential Election Could Impact M&A Activity in Latin America
- A Closer Look: Pension Reform in Brazil
- Copper Won’t Lead Chile’s Investment Recovery
23 Mar 2017
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21 Mar 2017
20 Mar 2017