Latin America: Equity dislocation as a fixed-income driver

By:
Rob Dwyer
Published on:

The fundamental dislocation of the region’s equity markets may actually drive DCM issuance in the coming year as a much-stalled pipeline of equity deals turns to M&A in frustration – and DCM deals will be printed to finance this predicted wave.

In Brazil, in particular, there is growing exasperation at the inability of companies to finance growth through issuing equity, and bankers report greater interest in this area, with private equity becoming an important source of capital for corporate growth.International equity investors have lost a lot of money as stocks have fallen, compounded by currency devaluations. In dollar terms, Latin American equities have performed particularly badly. "There are two types of international investors that look at Latin America," says Enrique Corredor, head of ex Brazil equity capital markets at BTG Pactual in New York. "Those who ‘have’ to own Latin America and those who are global. The guys that have to invest in the region are facing redemptions, so they don’t have the firepower to buy new issuances, and the few that do have some liquidity prefer to find value in the secondary market. "Meanwhile, the global investors are, for the...