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Borrower view, Fabio Barbosa: Optimism rules for Latin CFOs

When asked what vexes him most in his dealings with investment bankers, Fabio Barbosa, CFO of Brazilian mining company Companhia Vale do Rio Doce (CVRD), takes a few moments to think. He is certainly in a good position to offer an opinion. His company’s $1 billion 2016 bond was the largest ever Brazilian corporate issuance in the global capital markets; it has been able to issue cheaper debt than the sovereign; it comes to market regularly and leverages its global reputation and investment-grade rating to achieve extremely aggressive pricing on its bonds.

Barbosa, CVRD Barbosa, CVRD: “We are a reference point for other companies. We issue at our own risk, not Brazil’s”

“One thing is beginning to frustrate me: hybrids,” Barbosa eventually says. “I can’t count the number of meetings I have had recently discussing this same idea. I think that sometimes they just want to get a deal, or come here just for the sake of coming. I would say we are now extremely well educated about hybrids.” Barbosa’s tone is light-hearted but he’s not the only person in his position in Latin America who feels that the banks might well be over-pitching hybrids in their quest to extract juicy fees.

Minor grumbling aside, though, Barbosa acknowledges that the access to capital markets provided by banks has been crucial in supplying the funds CVRD needs for expansion. He says the company is nearly fully funded for the financial year; Xavier Astaburuaga, his counterpart at Mexican drinks company Femsa, is in similarly ebullient form when Euromoney calls.

“We are not anticipating any need for funding in the rest of 2006,” Astaburuaga says.

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