CVRD deal heralds mining finance bonanza
Outside the world of archaeology and Inca ruins, Peru is rarely considered a world leader in much other than bureaucracy and bad driving. But when it comes to mining and companies that seek to raise capital on local markets in Latin America, the mineral-rich Andean nation has positioned itself as the place to be. According to Dealogic, of the mining sector bond deals in Latin America over the past 18 months, Lima has handled six major issues, far more than in the traditionally sophisticated financial capitals of São Paolo, Mexico City, Santiago and Buenos Aires.
“Peru’s capital market is becoming a key source of mine capital as the investor base widens and the market gives companies more exposure. It’s one of the most significant developments we’ve seen in a long time in mine finance in Latin America,” says Jorge Luis Rodriguez, head of economic research at Lima brokerage Centura SAB. “The risk perception of issuing in Peru has fallen dramatically,” says Carlos Galvez, CFO at Buenaventura, a local metals company.
The market is not just for local mining companies. Canada’s Barrick Gold, one of the world’s biggest bullion producers, issued $100 million in debt in two tranches in April this year and April 2005 with paper of six-year and eight-year maturities, led by Citigroup and local bank Banco de Crédito.