Asia upsets the utilities

Privatization of Latin America's utilities has thrown up plenty of investment opportunities. Buyers need to finance not only the purchase but also capital expenditure - especially after years of underinvestment. Both have been affected by the Asian crisis. As general uncertainty about emerging markets persists, there are also concerns about the state of the all-important domestic US capital markets. James Rutter reports.

The last and biggest of Latin America’s privatization programmes is about to enter its second phase. Brazilian state-owned utility assets worth $30 billion will be put up for sale this year. At least, that’s the plan. For what until recently appeared to be a glorious swan song for the continent’s privatization story has been infected by the Asian contagion. For the privatization programme to succeed, the international capital markets need to be open for utility companies to raise financing.

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