CONTENTS

 

Executive summary

  • Key areas of analysis
  • Argentine corporates
  • Brazilian ABS
  • Brazilian debentures
  • Brazilian corporate issuance overseas
  • Brazilian IPOs
  • Brazilian loans
  • Brazilian M&A
  • Brazilian sovereign
  • Central America
  • Chilean loans
  • Chilean local corporate issuance
  • Chilean sovereign
  • Colombian corporates
  • Colombian sovereign
  • Ecuadorian sovereign
  • Mexican corporate issuance overseas
  • Mexican loans
  • Mexican local ABS
  • Mexican sovereign
  • Peruvian sovereign
  • Peruvian local and international corporate issuance
  • Uruguayan sovereign
  • Venezuelan sovereign
  • Venezuelan corporate

Chapter 01    Introduction – LatAm bond and loan summary

  • Bonds
    • Pipeline grows but market hurdles remain high
    • Technicals weigh on market
    • Changing landscapes
  • Loans
    • Market ticks along, but sees substantial decline in volumes
    • Key drivers
    • Relations, structures change
    • A/B loans help with tenors

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Chapter 02    Argentine corporates

  • Corporate borrowers remained sidelined amid buyer’s remorse
  • Activity grinds to halt
  • Sitting on the sidelines
  • Banks stay put despite slow spell
  • Local markets

Chapter 03    Argentine sovereign

  • Argentina at risk of medium-term default
  • Urgent reforms needed
    • Why Argentina is in technical default again
    • Digging a bigger hole
  • Solution to holdouts crisis necessary sooner rather than later
  • Getting back to single-digit yields post-holdouts crisis
  • Liability management urgently needed

Chapter 04    Argentina – wasted opportunities present a challenging outlook

By Stuart Culverhouse, Exotix

  • Economic challenges
  • Political damage
  • What does all this mean for investors?

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Chapter 05    Brazilian ABS, RMBS, CMBS

  • The ABS comeback market
  • Differential narrow, banks diversify
  • ABS needs a benchmark issuer
  • Opportunities – where are the mandates?
  • RMBS – future growth markets around the corner
  • The 50m-plus homes deficit

Chapter 06    Brazilian debentures

  • Plus ça change
  • Signs of recovery?
  • A better 2009 for plain vanillas
  • Pricing differential before and during crisis
  • Spread outlook
  • BNDES making a difference?
  • FGTS needed urgently
  • What should be done?
  • Covered bonds a way out?

Chapter 07    Brazilian ECM

  • Alive and kicking
  • Local listings
    • Hiding behind the floodgates
    • No small-time deals
    • Good stories can make it
    • Bovespa Mais adds an avenue
  • Upgrade could help revive Brazil IPOs
  • Taking the opposite direction

Chapter 08    Brazilian international corporate debt

  • Outlook
  • Fancy structures out of vogue
  • Opportunities for new names
  • New sectors

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Chapter 09    Brazilian M&A

  • Reversing the flow
  • Aggressive and hostile
  • Big boy financing
  • Buy thy neighbour
  • Home shopping
    • Housebuilder buying deals
  • Stable future
  • M&A case study – Vale
    • US$41bn in acquisition financing unofficially raised
    • US$30bn in equity possible?
    • Could Vale raise US$60bn in debt?
    • Takeout plan: US$25bn plus in dollar, euro and Real bonds

Chapter 10    Brazilian sovereign international

  • Brazil – a benchmark EM issuer
  • Creating new 15 and 20-year points
  • Taking out the 2040s
  • A new 30-year in Reais
  • Warrant exchange beckons?
  • Reopening BRL overseas, building new points locally

Chapter 11    Brazilian sovereign strategy

By Paulo Valle, Deputy Treasury Secretary

  • Overview of the Brazilian economy
  • Public debt management  
  • Annual borrowing plan, 2008
    • ABP strategy
  • Effects of the credit crunch
  • Conclusion

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Chapter 12    Central America & Caribbean

  • Using sovereign springboard for corporate mandates
    • Growing issuance
  • Panama – investment grade and Canal potential
  • El Salvador – more liability management to be done
  • Costa Rica – maturities approaching
  • Dominican Republic – work to do
  • Jamaica – more financing on the horizon
  • Guatemala – plans on hold
  • Aruba – returns with small deal

Chapter 13    Chilean loans

  • Opportunities and mandates to be had
    • Project finance pipeline
  • Changing pricing dynamic, clubs prevail
    • Widening spreads
  • Financial strains, but refinancing possible

Chapter 14    Chilean local corporate issuance

  • The undiscovered safe haven
  • The path to the gold
  • Foreign investment
  • Bank borrowing
  • Corporate borrowing
    • Segregating sectors
  • Chileans probe the continent
  • Liquidity increasing but investors are few
  • Market stability and little volatility

Chapter 15    Chilean sovereign

  • Scarcity is the main issue
  • Local beats global
  • Funds for a rainy day
  • Deepening the local market

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Chapter 16    Colombia – economic appraisal

By German Verdugo, Chief Economist, Correval

  • Improving economic fundamentals
  • Outlook for 2008–09

Chapter 17    Corporate Colombia

  • Opportunities and mandates to be had
  • Key sectors
  • Quasi-sovereign plays
  • Private sector funding – small sizes, but longer tenors
  • Local markets
  • Opportunities abroad
    • The Peruvian factor
  • An international peso market – an unfulfilled promise

Chapter 18    Colombia sovereign

  • Improving debt dynamics, but not investment grade yet
  • Improving credit metrics, comfortable funding needs
  • Recent forays
  • What's next on the financing horizon?
  • To pesify or not – the dynamics of Colombia's peso curve
  • Is there such a thing as too much peso debt?
  • Building local markets

Chapter 19    Ecuador

  • Correa uses rollercoaster bond rhetoric to gain votes
  • Correa's popularity and oil weaken – what next?
  • Bond buyback and exchange at par option

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Chapter 20    Mexican international corporate debt

  • Why go out when home is great?
  • Toll-roads head potential issuance
  • Other likely issuers
  • High grade, high yield
    • High prices for size

Chapter 21    Mexican local DCM

  • In-house issuance is healthy
  • Growing maturities ahead
    • Mandates to be had
  • Sector activity
  • Growth of non-federal debt
  • High-yield gets a boost
  • Retail-focused, short-term deals
    • Hanging on, with shorter tenors
  • Market prospects – money is there, but not for all
    • Same old structure
    • Fees – more work, less money
    • Ripe for foreigners

Chapter 22    Mexican securitisation

  • Future flows
  • The road to security
  • Building blocks
  • Safety issues
  • Easier to buy
  • Still rising
  • Securitised roads
  • Leasing contracts
  • SIV creativity

Chapter 23    Mexican loans

  • Opportunities and mandates to be had – infrastructure leads the way
  • Blue chips stay sidelined
    • Lower tiers look to local bank funding
  • Infrastructure drives momentum
    • Energy reforms
  • Pricing conundrums

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Chapter 24    Mexican sovereign

  • Mission accomplished – where does Mexico go from here?
  • Warrants, buybacks and retaps
  • Making the most of warrants
  • Domestic debt dominates – local horizons
  • Lengthening maturities, focusing on fixed rates
  • Focusing on microstructures
  • Medium-term risks

Chapter 25    Mexico in 2009 – between slowdown and stability

By Luis Flores S., Senior Economist, Ixe Financial Group

Chapter 26    The role of public debt management in financial development – the case of Mexico

By Gerardo Rodríguez, Head of Public Credit

  • Moves to develop the markets
  • Public debt policy success
  • Future challenges

Chapter 27    Peruvian sovereign

  • Going local
  • Buyback targets
  • Maturities away
  • Want our business? Come in first
  • The challenge remains

Chapter 28    Peruvian local and international corporate issuance

  • A seed to be nurtured
  • Seeking growth
  • Borrowing lenders
  • The other borrowers
  • Planting change

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Chapter 29    Uruguay sovereign

  • Small but brave
  • Investment grade or bust
  • Staying local
  • Aiming high
  • Maintaining stability
    • Dollar troubles

Chapter 30    A view on Uruguay’s liability management

By Carlos Steneri

  • Debt management fundamentals
  • Strategy implementation
  • The results
  • Looking forward

Chapter 31    Venezuelan sovereign

  • It's a debt strategy but not as we know it
  • Promises, promises – when will buybacks occur?
  • Buyback targets
  • Staying local, US banks not invited
  • Why change it if it works
  • Tweaking the Bono del Sur
  • Risks galore – which way do you look?

Chapter 32    Invest in Venezuela at your own peril

  • If Venezuela cuts oil supplies to US, default likely
  • More nationalisations and IMF exit remain a threat

Chapter 33    Venezuelan corporate issuance

  • Opportunities and mandates
  • PDVSA leads
    • Debt concerns
  • Banks stick close to home

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LIST OF TABLES AND FIGURES

Table 1.1:    LatAm pipeline of possible bond issuance, as of late August 2008 (US$m)
Table 1.2:    LatAm 2007 sovereign & corporate bond issuance, by rating
Table 1.3:    LatAm 2008 sovereign & corporate bond issuance, by rating
Table 1.4:    LatAm international DCM issuance, 2007–Sep 2008

Table 2.1:    Argentine loans closed, Jan–Aug 2008
Table 2.2:    Argentine corporate bond levels (close of 29 August 2009)

Table 3.1:    Argentina total debt (US$m)
Table 3.2:    Argentine foreign currency debt, end-2007 (US$m)

Table 5.1:    Top 50 Brazilian financial institutions
Table 5.2:    Brazilian banks – total assets vs. BIS ratios (%)
Table 5.3:    Brazilian debenture, ABS opportunities, May 2004–Apr 2008

Table 6.1:    Evolution of DI plus spreads in Brazilian debentures, Jul-Dec 2007 (%)
Table 6.2:    Evolution of DI plus spreads in Brazilian debentures, Jan–mid-2008 (%)

Table 8.1:    Brazil international DCM issuance, Jan 2007–12 Jun 2008 (US$m)
Table 8.2:    Brazilian loan volumes vs. other LatAm countries 2005–08
Table 8.3:    Brazilian loans closed, Jan–Jul 2008 (US$m)

Table 9.1:    Brazilian M&A – leading sector in number of transactions, 2002–07

Table 12.1:    Central American corporate & sovereign issuance, 2000–08
Table 12.2:    Outstanding sovereign bonds – Aruba, Costa Rica, Dominican Republic, El Salvador, Guatemala, Jamaica, Panama

Table 13.1:    Chilean loans maturing in 2009
Table 13.2:    Chilean loans maturing in 2010
Table 13.3:    Estimated funding needs and investment plans for energy projects
Table 13.4:    Chilean loans closed, Jan-Aug 2008 (US$m)
Table 13.5:    Chilean loans due to close in Q4 2008 (US$m)

Table 17.1:    Colombia – corporate issuance, 2000–Aug 2008
Table 17.2:    Colombia – outstanding corporate US dollar bonds
Table 17.3:    Colombia – outstanding international corporate bonds

Table 18.1:    Evolution of Colombia's ratings
Table 18.2:    Colombia – outstanding US dollar and euro bonds
Table 18.3:    Colombia – external financing sources/debt service, 2008–09
Table 18.4:    Colombia – TES Global curve

Table 23.1:    Major Mexican infrastructure projects to be awarded in 2008
Table 23.2:    Mexican loans closed, Jan–Aug 2008

Table 24.1:    Mexican exchange warrants
Table 24.2:    Financial position of Mexican Federal Government, 2007, 2008 (Ps m)
Table 24.3:    Mexican government net debt (foreign vs. domestic), 2000–07E
Table 24.4:    SCT investment estimates in infrastructure, 2007–12
Table 24.5:    Mexico – outstanding international Pemex bonds
Table 24.6:    Mexico – outstanding international sovereign bonds

Table 28.1:    Peruvian cross-border issuance, 2005–08 (US$m)

Table 30.1:    Uruguay central government total debt, 2005–Jul 2008
Table 30.2:    Central government flow of funds, 2008, 2009 (US$m)

Table 31.1:    Venezuela – outstanding international sovereign bonds

Table 33.1:    Venezuela – outstanding PDVSA bonds


Figure 5.1:    Brazilian ABS, CMBS and RMBS issuance, 2002–June 2008 (R$bn)

Figure 6.1:    Brazilian debenture volumes, 2000–03 (R$bn)
Figure 6.2:    Brazilian debenture volumes, 2000–05 (R$bn)
Figure 6.3:    Brazilian debenture volumes, 2003–05 (R$bn)
Figure 6.4:    Brazilian debenture volumes, 2006–mid-2008 (R$bn)

Figure 7.1:    Brazilian IPOs – number of share offerings, 2004–08
Figure 7.2:    Brazilian IPOs – volume of share offerings, 2004–08 (R$bn)
Figure 7.3:    Brazilian IPOs – number of IPOs, 2004–08
Figure 7.4:    Brazilian IPOs – average deal size, 2004–08 (R$m)
Figure 7.5:    Brazilian IPOs – average daily trades, 2004–07 (000s)
Figure 7.6:    Brazilian IPOs – foreign investor participation in stock trades, 2004–07 (%)
Figure 7.7:    Brazilian IPOs – average foreign investor participation in equity issuance deals, 2004–08 (%)

Figure 9.1:    Brazilian M&A – volume of transactions, 2002–07 (R$bn)
Figure 9.2:    Brazilian M&A – number of deals, 2002–07
Figure 9.3:    Brazilian M&A – acquisition of foreign companies by Brazilian companies, 2005–07 (R$bn)
Figure 9.4:    Brazilian M&A – acquisition of Brazilian companies by foreign companies, 2005–07 (R$bn)
Figure 9.5:    Brazilian M&A – share of cross-border transactions of Brazilian companies buying foreign companies vs. total, 2002–07 (%)

Figure 10.1:    Brazil's May and interpolated yields for 2024 and 2029 points
Figure 10.2:    Brazil's internal and external debt composition, Jan–Apr 2008
Figure 10.3:    Impact of Brazil buyback programme on its dollar-denominated bonds with focus on short end (US$m)
Figure 10.4:    Brazil's internal, external and total debt composition, Jan–Apr 2008 (R$m)
Figure 10.5:    Brazil's fixed-rate LTN, NTN-F bonds (R$bn)
Figure 10.6:    Brazil's local inflation-linked bonds (R$bn)
Figure 10.7:    Brazil's wholesale inflation-linked NTN-C bonds (R$bn)
Figure 10.8:    Brazil's floating rate LFT notes (R$bn)

Figure 11.1:    Bovespa IPOs, 2004–07 (R$bn)
Figure 11.2:    GILB inflation-linked local bonds (US$bn)
Figure 11.3:    Public sector net debt to GDP ratio (%)
Figure 11.4:    External debt and reserves, 2003–Jun 2008 (US$bn)
Figure 11.5:    Domestic debt maturity profile, Aug 2008–Dec 2009 (R$bn)
Figure 11.6:    Active debt management policy, Q1 2006–Q1 2008 (R$ bn)
Figure 11.7:    Fixed-rate bonds liquidity indicator (%, R$m)
Figure 11.8:    Inflation-linked bonds liquidity indicator (%, R$m)
Figure 11.9:    US dollar curve
Figure 11.10:    CDS relative performance, Jul 2007–Jul 2008

Figure 14.1:    Chilean corporate issuance, 2002–Sep 2008 (Ps bn)

Figure 15.1:    Chilean sovereign – maturity schedule, 2008–18
Figure 15.2:    Chilean sovereign – dollarisation of debt, 2003–07
Figure 15.3:    Chilean sovereign – total indebtedness, 2003–07
Figure 15.4:    Chilean sovereign – outstanding debt, 2003–07 (US$m)
Figure 15.5:    Chilean sovereign – foreign reserves, 2003–08E (US$bn)

Figure 20.1:    Mexican international DCM – cross-border corporate issuance, 2003–08 (US$bn)

Figure 21.1:    Mexican DCM – non-federal debt issued, 2003–H2 2008 (Ps bn)
Figure 21.2:    Mexican DCM – non-federal debt outstanding, 2003–H2 2008 (Ps bn)
Figure 21.3:    Mexican DCM – commercial paper and other forms of short-term debt outstanding, 2004–Apr 2008 (Ps bn)
Figure 21.4:    Mexican DCM – ratings breakdown of non-federal debt outstanding, June 2008 (%)
Figure 21.5:    Mexican DCM – ratings breakdown of non-federal debt issued, June 2008 (%)
Figure 21.6:    Mexican DCM – breakdown of debt outstanding, by type, 2008 (%)
Figure 21.7:    Mexican DCM – breakdown of debt issued, by type, 2007, Apr 2008 (%)
Figure 21.8:    Mexican DCM – corporate maturity schedule, 2008–14 (Ps bn)

Figure 22.1:    Mexican structured debt within local debt capital markets, 2003–Apr 2008
Figure 22.2:    SHF mortgage loan issuance, 2002–end-Apr 2008
Figure 22.3:    RMBS issuance – total volume vs. US$-denominated volume, 2003–12 June 2008 (US$m)
Figure 22.4:    RMBS deals – mezzanine vs. SHF guarantee, 2003–12 June 2008
Figure 22.5:    RMBS – average tenor vs. weighted average life, 2003–12 June 2008

Figure 24.1:    Mexico external debt, by currency, 2007 (US$bn)
Figure 24.2:    Average life of external debt until maturity
Figure 24.3:    Distribution of foreign holdings of local government securities, 18 Jun 2008 (%)

Figure 27.1:    Peru – sovereign maturity schedule, 2009–18 (US$bn)
Figure 27.2:    Peru – debt to foreign reserves ratio, 2003-07 (%)
Figure 27.3:    Peru – sovereign indebtedness, 2003-07 (%)
Figure 27.4:    Peru – sovereign share of internal debt vs. external bonds, 2003-Jun 2008 (%)

Figure 29.1:    Uruguay – maturity schedule, 2008–18 (US$m)
Figure 29.2:    Uruguay – net public debt as percentage of GDP. 2003–08E
Figure 29.3:    Uruguay – primary surplus/deficit as percentage of GDP, 2001–09E

Figure 30.1:    Uruguay central government amortisations, Dec 2005–Jul 2008 (US$m)

Figure 32.1:    Venezuelan sovereign debt, 10–12 Sep 2008

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