CAPITAL MARKETS
What developments are ahead for the capital markets in Mexico and Brazil, and more broadly in Latin America?
Arturo Carrillo
New York
Mexico is currently experiencing extraordinary and unprecedented international capital markets activity in both equity and debt offerings. Two equity issuances in February 2013 of US$3B underline this trend. Grupo Sanborns, the flagship company of the Carlos Slim empire and one of the most iconic Mexican brands, raised approximately US$950M in the largest Latin American IPO so far this year. The Sanborns IPO followed by two weeks Fibra Uno’s US$1.8B offering, the largest equity offering in Latin America this year. Fibra Uno is the very first Latin American REIT. It was established after a comprehensive legal overhaul in Mexico created the “FIBRA” investment structure, which bears many similarities to the U.S. REIT. We worked on all of these offerings and helped create the REIT structure in Mexico.
Debt capital markets are equally active. For instance another client, Tenedora Nemak, one of the world’s largest manufacturers of powertrain components for the automotive industry, launched one of the most favorably priced high-yield securities offerings to date in Latin America. The pipeline for 2013 for debt and equity international securities offerings by Mexican companies also looks stellar, including numerous IPOs and offerings by new and existing FIBRAs.
Taisa Markus
New York
Brazil is experiencing a market correction in 2013 after years of historically high levels of M&A and capital markets activity. The medium- to long-term outlook for Brazil’s capital markets and economy remains positive, however, with an expected boost from hosting the upcoming World Cup in 2014 and Summer Olympics in 2016. The economy’s size and vibrancy, and the country’s importance and influence, make it a key market for investors. This past year, we closed the largest corporate equity offering in Brazil, the re-IPO of the electricity transmission company TAESA.
Overall, Latin America provides very interesting market opportunities for our clients. Peru’s economy continues its favorable trajectory. Capital markets have moved beyond debt issuance for well-known names to debt, including high-yield, issues as well as equity issues for a broader range of companies. Issuers from what were previously known as “frontier” emerging markets also accessed international markets. In Paraguay this year, we closed an acquisition finance and subsequent high-yield take out for Telefonica Celular del Paraguay, a subsidiary of Millicom International, and Banco Continental del Paraguay’s inaugural bond issue. We continue to see opportunities in Chile, Colombia, and throughout Central America.
