The Future Of Capital Markets In Latin America

The outlook for the markets in Latin America looks strong for 2019. Investors are finding numerous business opportunities in many countries in Latin America. With increased cross- border deals that involve secure corporate bonds, project finance, syndicated loans and bilateral loans, companies will need a local partner to help with these transactions.

Brazil

The new president in Brazil has put an immediate focus on infrastructure investments. But improvements of the roads, ports and highways will not be financed by the government. Because of limited funds from the government, it is likely that infrastructure assets which need long-term financing will end up being financed by either private investors or banks and will have to be structured.

Prior to the election of the new president, many M&A transactions were put on hold especially in the last half of 2018. But, now that the president is in place and the new economic team has been appointed, there will definitively be an increase in M&A activity. The predictions show capital markets activity having a large increase in the amount of deals as well as the volume of transactions amounts, potentially reaching record volumes. The stock market has seen increased volumes in the first weeks of 2019 and this trend should continue for the rest of the year.

Hispanic LatAm

After presidential elections in many of the most prominent countries in LatAm, it seems there is more clarity about the policy direction in the region. Except for Argentina, economic growth is recovering mainly in Peru, Mexico, Colombia and Chile. However, economic growth is trending lower.

Peruvian growth will be driven by domestic demand, improved credit availability and enhanced government control leading to the reduction of corruption. Assets that were previously frozen due to corruption scandals are ending, which could be a good sign for increased infrastructure project development.

In Argentina, high inflation, a shrinking economy and the uncertainty surrounding the presidential elections in 2019 are raising risks and as a result the country is experiencing a contraction in lending.

With limited public resources, the influx of financing for green energy projects is coming from the private sector and multilaterals financial institutions. The country's goal is to help reduce greenhouse emissions.

Questions remain in Argentina around public and private programmes (PPP) to develop the much-needed infrastructure improvements in...