experiencias exitosas recientes de emisores la ti no america nos
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8/3/2019 Experiencias Exitosas Recientes de Emisores La Ti No America Nos
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Experiencias exitosas recientes de EmisoresLatinoamericanos
¿Qué ventanas de oportunidad existen?
Daniel Kastholm, CFA
Managing Director
Fitch Ratings Mexico Conference
Mexico City
November 27th, 2007
8/3/2019 Experiencias Exitosas Recientes de Emisores La Ti No America Nos
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Issuance Trends and Implications
Liquidity and the Impact on Latin America Corporate Credit
Increasing Shift from Systemic to Idiosyncratic Risk
Latin America Corporate High Yield Dominates
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November 27th, 2007www.fitchratings.com 2
Emerging Markets Boosted by Positive Trends
Average Rating by EM Region
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
Latin America
Emerging Asia
Emerging Europe
A–
BBB+
BB–
BBB
BBB–
BB
BB+
B+
Source: Fitch Ratings
> Solid Economic Growth
> High commodity prices
> Increasing domestic demand
> Decreasing debt burdens
> Lower funding requirements
> Strong international reserves
8/3/2019 Experiencias Exitosas Recientes de Emisores La Ti No America Nos
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November 27th, 2007www.fitchratings.com 3
Emerging Markets and the Credit Crunch …
EMBI+ Credit Spread
125
145
165
185
205
225
245
265
0 2 - A p r - 0 7
1 7 - A p r - 0 7
0 2 - M a y - 0 7
1 7 - M a y - 0 7
0 1 - J u n - 0 7
1 6 - J u n - 0 7
0 1 - J u l - 0 7
1 6 - J u l - 0 7
3 1 - J u l - 0 7
1 5 - A u
g - 0 7
3 0 - A u
g - 0 7
1 4 - S e
p - 0 7
2 9 - S e
p - 0 7
1 4 - O
c t - 0 7
2 9 - O
c t - 0 7
1 3 - N o v - 0 7
Source: JPM
8/3/2019 Experiencias Exitosas Recientes de Emisores La Ti No America Nos
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November 27th, 2007www.fitchratings.com 4
Emerging Markets and the Credit Crunch …
EMBI+ Credit Spread
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1995 1998 2001 2004 2007
Tequila CrisisAsia and
Russia Crises
Argentina Default
Brazil Crisis
Source: JPM
Sub-PrimeCrisis
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November 27th, 2007www.fitchratings.com 5
Latam Cross Border Issuances - Coming Back to Life ???
Issuer Date Amount Coupon Average Life Fitch S&P Mdy'sCap Cana (Dominican Republic) Nov-07 500$ Pending 8.5 B- - B3
San Luis (Mexico) Nov-07 275$ Pending 10 B - B2
Unialco (Brazil) Nov-07 150$ Pending 10 - B B2
Trump Ocean Club (Panama) Nov-07 220$ 10.75% 5.5 BB - Ba3
Petrobras (Brazil) Nov-07 1,000$ 6.06% 10 BBB- BBB- Baa1
EEB (Colombia) Oct-07 610$ 8.75% 7 BB BB -Gerdau (Brazil) Oct-07 1,000$ 7.25% 10 BBB- BBB- -
Durango SA de CV (Mexico) Oct-07 520$ 10.50% 8 B+ B+ -
Edenor (Argentina) Oct-07 200$ 10.50% 10 - B- B2
IMPSA (Argentina) Oct-07 225$ 11.25% 7 B - -
Odebrecht (Brazil) Oct-07 200$ 7.50% 10 BB+ BB -
KUO - Desc (Mexico) Oct-07 300$ 9.88% 10 BB- BB- -
Grupo Rede (Brazil) Sep-07 175$ 11.13% Perp B B B3
Grupo Senda (Mexico) Sep-07 150$ 10.50% 4 B+ B+ -
TGI International Ltd (Colombia) Sep-07 750$ 9.50% 10 BB BB -
GP Investments Ltd (Colombia) Sep-07 40$ 10.00% Perp B B+ -
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November 27th, 2007www.fitchratings.com 6
Financial Flows to Emerging Markets
Gross Capital Market Flows to
Emerging Markets
0
100
200
300
400
500
600
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
I H 2 0
0 7
Bonds Equity Loans
International Gross BondIssuance
0
10
20
30
40
50
60
70
80
Q 1 0 4
Q 3 0 4
Q 1 0 5
Q 3 0 5
Q 1 0 6
Q 3 0 6
Q 1 0 7
Q 3 0 7
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Non-sovereign
Sovereign
% Non-sov
(USD Bil.)
Source: Capital Bondware and Fitch estimatesSource: IMF
(USD Bil.)
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November 27th, 2007www.fitchratings.com 7
Latam Corporate Issuance Follows Broader EM Markets
0
5,000
10,000
15,000
20,000
25,000
1991 1993 1995 1997 1999 2001 2003 2005 YTD 2007
0
2
4
6
8
10
12
14
16
18
Corp/Util Ave. Life of Issue (yrs.)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Corp/Util Sov/CG/SA /Sup
Source: Capital Bondware and Fitch estimatesSource: Capital Bondware and Fitch estimates
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November 27th, 2007www.fitchratings.com 8
Fitch’s Latin American Corporate Aggregate
-
100
200
300
400
500
600700
800
900
2002 2003 2004 2005 2006
-
1.0
2.0
3.0
4.0
5.0
EBITDA Total Debt Total Debt/EBITDA
-
50
100
150
200
250
300
2002 2003 2004 2005 2006
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
EBITDA EBITDA Margin %
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2002 2003 2004 2005 2006
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Revenues Revenue Growth %
-
20
40
60
80
100
120
140
2002 2003 2004 2005 2006
CA PEX Depreciation
Source: Company Reports, Various Other Data Sources, Fitch Estimates
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November 27th, 2007www.fitchratings.com 9
Liquidity Great For Issuers …. and Creditors?
B+ to CCC Ratings - Category Medians
2002 2003 2004 2005 2006 Average
Liquidity Ratio 0.4 0.6 1.0 2.1 3.8 1.6STD % (STD/TD) (%) 53 44 40 23 10 33LTD % (LTD/TD) (%) 47 56 60 77 90 66
BB+ to BB- Ratings - Category Medians
2002 2003 2004 2005 2006 Average
Liquidity Ratio 2.0 2.2 3.7 7.2 7.4 4.5
STD % (STD/TD) (%) 33 30 25 14 11 22LTD % (LTD/TD) (%) 67 70 75 86 89 77
BBB+ to BBB- Ratings - Category Medians
2002 2003 2004 2005 2006 Averages
Liquidity Ratio 4.8 3.5 5.8 5.6 5.3 5.0STD % (STD/TD) (%) 16 19 12 18 17 16
LTD % (LTD/TD) (%) 84 81 88 82 83 83
A+ to A- Ratings - Category Medians2002 2003 2004 2005 2006 Average
Liquidity Ratio 6. 2 4.6 5.7 9.0 6.7 6.4STD % (STD/TD) (%) 15 12 13 9 10 11LTD % (LTD/TD) (%) 85 88 87 91 90 88
Source: Latin America Company Reports, Various Other Data Sources, Fitch Estimates
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November 27th, 2007www.fitchratings.com 10
EM Corporate Bondholders Exposure to Event Risk
Maverick TubeCorporation - MVK
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November 27th, 2007www.fitchratings.com 11
Greater Focus on Specific Corporate Risks
0
2
4
6
8
10
12
14
16
Company A Company B Company C Company D
“B”
“BB”
“BBB”
“A”
Chile Ceiling A+
Mexico Ceiling A-
Brazil Ceiling BBB-
Argentina Ceiling B+
L o
w e r S o v e r e i g n R
i s k s
Higher Corporate Risks
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November 27th, 2007www.fitchratings.com 12
Latin America High Yield Credits By Country
Other/DR
8%
Argentina32%
Brazil
35%
Mexico22%
Chile
3%
Source: Fitch Estimates, Location of BB+ or Lower Cross Border Latam Issuers
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November 27th, 2007www.fitchratings.com 13
Victory for the Left in Last Elections
Populist Left
Moderate Left
Center-right
Price Controls = Expropriation
New Rules
Increased Government
Involvement
State Model vs. Private Model
Respect for contracts
Nationalization
Higher Taxes
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November 27th, 2007www.fitchratings.com 14
CAGR20062005200420032002
(8.3%)8,56510,60312,33813,88014,596Net Debt
(7.0%)10,43312,42615,17216,58216,060Total Debt
22.9%3,9843,2622,4981,7981,857Capex
9.9%8,7028,7007,6856,7675,815EBITDA
15.7%23,35320,80116,77214,07313,086Revenues
Fitch’s Argentina High Yield Aggregate
14.9%17%16%15%13%14%Capex % Revenue
0.901.231.070.880.610.69Reinvestment Ratio
Averages
34.9%46%37%33%27%32%Capex % EBITDA
1.671.01.21.62.12.5Net Debt/EBITDA
1.961.21.42.02.52.8Total Debt/EBITDA
43.5%37.3%41.8%45.8%48.1%44.4%EBITDA Margin %
Source: Company Reports, Local Stock Exchanges, Fitch Estimates
Significant Underinvestment
Positive Leverage Trend - Restructuring
Credits Metrics Not Comparable WithPeer Group
Average Rating = B
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November 27th, 2007www.fitchratings.com 16
Fitch’s Mexico High Yield Aggregate
CAGR20062005200420032002
(2.3%)5,5065,1845,1875,6176,219Net Debt
(0.7%)6,5006,1715,9236,1136,732Total Debt
33.1%1,292546575553487Capex
7.8%2,0471,5951,5161,3851,470EBITDA
6.4%10,9759,3618,7788,0618,317Revenues
7.4%12%6%7%7%6%Capex % Revenue
1.01.830.840.840.820.67Reinvestment Ratio
Averages
41.7%63%34%38%40%33%Capex % EBITDA
3.532.683.253.424.054.23Net Debt/EBITDA
3.993.183.873.914.414.58Total Debt/EBITDA
17.6%18.7%17.0%17.3%17.2%17.7%EBITDA Margin %
Source: Company Reports, Various Other Data Sources, Fitch Estimates
Stable Margins But Lower Than Peers
Higher Debt Levels –Lower Cash
Historic Underinvestment
Slower Growth Relative to Peers
Average Rating = B+
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November 27th, 2007www.fitchratings.com 17
Summary> Credit fundamentals for emerging market corporates have generally improved, which has
led to positive rating actions and decreased sovereign rating compression in many
countries
> Strong regional economies and globally market liquidity and capital flows over the last two
plus years have lowered certain external risks for most companies at virtually all ratings
levels on average. Although risk of external shock and the economic slowdown in the US
and its impact on EM economies remain the predominate concern.
> First time issuers, generally lower tier names, are entering the market in droves and lack
the same level of sophistication as the “blue chips” adding to risk. These first time issuers
require more attention to stand-alone corporate (idiosyncratic) risks versus the more
traditional systemic risks normally associated with emerging market corporates.
> Key Risks include - consistency of business strategy, quality of reporting, size,
geographic/product diversity, management depth.
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