Colombia’s top bank offers Americans a bumpy ride 12 Sep 2014 Grupo Aval wants to raise $1.1 bln on the NYSE. It earns better returns than most U.S. banks and operates in Latin America’s fastest-growing economy. But dual-class shares give its founder near-total control. And the lender’s using the proceeds to boost capital, sapping earnings.
Argentine opportunity cost is reason to cut deal 28 Jul 2014 Another default arguably might not make things immediately worse. But it would set back recent efforts to curry favor with international financiers. With maybe $300 bln needed to develop shale oil and gas alone, swallowing national pride and ponying up $15 bln look worth it.
World Bank takes on Wall St over Itaú’s stitch-up 9 Jul 2014 The Washington lender’s IFC is hiring an independent adviser to analyze the Brazilian bank’s bid to control Chile’s CorpBanca without paying a premium to minority shareholders. That could challenge the fairness opinions put forth by Goldman and BofA in support of the deal.
Colombia will have to settle for Latam second best 23 May 2014 President Juan Manuel Santos is on his way to winning re-election after helping propel his country’s economic fortunes. Nevertheless, Colombia faces serious geographic, political and social constraints. That means Chile should retain its singular gold-plated status in the region.
Venezuela’s oil diplomacy is past its sell-by date 27 Mar 2014 The Bolivarian Republic still gives about $9 bln a year in free crude to the likes of Cuba. Even ignoring domestic shortages of staples, that’s enough to cover, say, a year of debt service. With economic cracks widening, President Maduro could start by cutting off this largess.
Brazil shares cheap for a reason: Meddling state 14 Jan 2014 The Bovespa’s 16 pct decline last year has left Brazilian stocks relatively undervalued. For one explanation, investors need only look at Brasilia’s efforts to prod a private sugar firm to absorb the nation’s top rail operator. Such statist matchmaking warrants a discount.
Governance will matter south of the U.S. border 23 Dec 2013 A 10-year boom in natural resources and easy money allowed bad Latin governments to do as well as good ones. Now with commodities flat and rates rising, regimes that respect investor and property rights, while spending money and allocating capital wisely, should shine.
Uruguay’s weed spoils could get even higher 12 Dec 2013 The country is first to legalize marijuana trade, with production from co-ops, sales to locals only and prices fixed. Relaxing such restrictions, however, could really spark up the economy. The Dutch did well from cannabis tourism, but agribusiness could be the winner in Uruguay.
Brazil’s wasteful state bank can learn from Chile 23 Oct 2013 Most of the $80 bln BNDES lends every year goes to big firms like Vale or Petrobras, which could easily borrow from private sector lenders. The OECD thinks that’s bad policy. CORFO, Chile’s development bank, does a better job directing resources where they’re actually useful.
Dissing Uncle Sam is a low-cost political tactic 25 Sep 2013 Brazil’s Dilma Rousseff canceled a U.S. state visit and made a critical speech at the UN. Yet even pariah Iran has shown long-term growth on a par with some U.S. allies like the Philippines and Egypt. Bashing Washington doesn’t seem too costly. Wall Street is another matter.
Emerging economies need to change to compete 5 Sep 2013 -The World Economic Forum’s annual competitiveness rankings hold little succour for some countries that are feeling market pressure. Brazil and India are deteriorating, Venezuela and Argentina plunging. Some Asian countries fare better but reforms are vital almost everywhere.
Review: Venezuela’s revolutionary leaves chaos behind 2 Aug 2013 “Comandante” isn’t a tribute to the late Venezuelan leader, Hugo Chavez. Rather, it’s a realistic account of his follies and chaotic governance. The profile of Nicolas Maduro, his successor, bodes ill. What the book lacks is atmosphere, depth and drama.
Four-way Latam trade deal holds quadratic power 28 May 2013 Eliminating tariffs on most goods between Colombia, Mexico, Peru and Chile is a big step for the region. For one, it should expand a largely U.S.-centric export program to Asia. More broadly, greater cooperation may create bigger integrating forces for a fractured Latin America.
U.S. courts make mark in Argentina creditor spat 22 Apr 2013 Judges have, unusually, tried to broker a deal between the Latam nation and hedge funds still objecting to debt swaps in 2005 and 2010. Ordering Argentina to honor its contracts and pushing others to clarify theirs were also useful moves. The rule of law is coming out ahead.
Latin America can’t afford parochial finance 15 Mar 2013 Ecuador wants to abandon a treaty for resolving U.S. investment disputes. Other nearby nations have ditched a similar multilateral pact. Such accords gird modern globalization. Rows involving Argentina and Chevron mean investors hardly need more reasons to avoid the region.
Chavez’s economic program did everything but work 5 Mar 2013 The Venezuelan strongman won elections regularly and his populist economics played well at home. His rule coincided with a giant surge in oil prices, helping avoid bankruptcy. Yet Chavez’s policies alienated foreign investors as well as governments and kept Venezuelans poor.
Brewing Latam defaults could prompt 1980s re-run 5 Mar 2013 Argentina may stop all debt payments to avoid paying holdout creditors from its last default 11 years ago, and Venezuela’s credit looks shaky. The danger is that one failure to pay sparks others in the region, and even virtuous borrowers like Colombia are cut off from credit.
Sherwin-Williams deal colors Latam green 12 Nov 2012 The U.S. paint maker is splashing out $2.3 bln for Mexican rival Comex. Expected cost savings are worth about $500 million, and yet the market added almost twice as much to Sherwin-Williams’ value. It’s a testament to optimism about the region despite some signs of sluggishness.
AT&T is all dressed up with nowhere to go 12 Nov 2012 The telecom company had a $93 bln bid for Telefonica blocked by Madrid, according to a Spanish newspaper. The target has denied the story. But it’s a sign of the problem AT&T faces: a lofty stock multiple makes M&A tempting, but it seems shut out of both domestic and foreign deals.
Latam’s bad oil policies laid bare across an ocean 13 Aug 2012 Despite some tough regimes and far smaller reserves, Africa is set to overtake Latin America’s crude output this year. The unlikely reversal reflects investor-friendly approaches in the likes of Angola. It’s also the clearest sign yet of how misguided the Latin region’s course is.