Debtwire Latin America Forum

December 6, 2017 | JW Marriott, Essex House, New York

Explore the opportunities, risks, and trends in Latin America

While many Latin governments have strengthened their balance of payments and local high yield corporates have cleaned up their balance sheets and lowered expected default rates, challenges remain. In addition to Mexico and Brazil, four other major elections will be held in 2018 in key Latin American countries, presenting creditors with opportunity and uncertainty. There also remains much deviation in terms of trade, balance of payment and monetary issues for each respective country, in what seems a north-south continental divide in policy. Inflation, commodity prices and critical legal developments in corporate restructuring cases remain serious issues as well.

Please join the Debtwire team and esteemed panelists for a thorough discussion of credit opportunities in Latin America and beyond in 2018.

Agenda

Registration & Coffee

Welcome Address

Keynote Presentation

Mexican Markets Prove to be Resilient

A rising rate environment, stabilized peso and commodity prices, and most importantly the decline in the country's current account deficit, which shrank markedly in 2Q17, have given creditors an improved environment for work outs with corporate borrowers. While companies like Oro Negro, CP Latina and ODH remain locked in negotiations with creditors and coping with lower Pemex day rates, economic conditions should enable Mexican corporates to find resilient growth and renewed prospects. Additionally, how has Empresas ICA's pre-pack bankruptcy tested Mexico's framework and how will other companies that have reached agreements with creditors return to growth? Furthermore, bucking concerns around NAFTA negotiations, creditors are especially excited about opportunities in the country's communications, financial services and manufacturing sectors as management teams look to grow.

Listen to panelists discuss the economic and restructuring environment throughout Mexico:

  • How are auto parts manufacturers, such as Nemak, Rassini and others, reacting to US tariff threats from the new administration? What will this mean for revenues and costs?
  • Assessing legal developments in Abengoa Mexico, CP Latina, Empresas ICA and others while considering backdrop of rising rates, commodity price swings, MXN/USD exchange rate and if restructuring plans will enable companies to successfully turnaround in a changing economy.
  • What are Oro Negro's prospects of improving its financial position, especially after missing July amortization payments that followed an April restructuring agreement with creditors?
  • Discuss outlook for oil asset privatizations over next 12 months.
  • NAFTA renegotiations and Mexico's improving current account balance situation.
  • How will 2018 elections impact corporate recoveries and economic reform?

Coffee Networking Break

The Emerging Andean Region

Various Andean economies and companies represent great opportunity for credit as several countries continue to grow and reform. The normalization of copper price trends has stabilized the Peruvian sol (PEN) and Chilean peso (CLP) while the Colombian peso (COP) continues with volatility. In Ecuador, newly elected President Lenin Moreno has surprised many with market-friendly economic announcements while investors continue to see Peruvian credits as a safe choice because it remains a well-managed country with orthodox economic policies. Also, investors are finding that Argentina represents an opportunity to diversify their Latin American investments as the country continues on a path of reform and growth.

Delegates will have an opportunity to hear about the risks and rewards in credit throughout the Andean Mountain range.

  • How have recent Argentine corporate issuers performed thus far? How have energy sector regulatory reform and new policies benefited issuers? Is the Macri Administration meeting expectations?
  • Assessment of Colombia Telecomunicaciones. How will the company address the Parapat pension obligations/liquidity? On what terms will the government provide equity and then exit
  • Andino Investment Holding and Ajegroup have seen their bond prices rebound, what does this tell investors about the environment in Peru and confidence in single B credits?
  • Assessing opportunities for high-yield issuers from Peru's USD 50bn mining development pipeline.
  • What does Venezuelan political turmoil mean for debt service obligations? How are US sanctions affecting the country's liabilities? Would a new government likely restructure or default and how would either outcome transpire?
  • Explore Chilean bus company Inversiones Alsacia's bankruptcy case vs. its failed US Chapter 11 hearing.

Lunch

Brazil's Corporate and Economic Recovery Faces Uncertainty

Emerging from a nasty recession many Brazilian companies are still trying to turnaround operations and balance sheets, but recalcitrant creditors have slowed progress. For instance, telecom giant Oi continues to work with its creditors and shareholders over changes to its restructuring plan after many stakeholders disliked its initial version. Foreign creditors have encountered several difficulties themselves in Chapter 11 & 15 proceedings of Brazilian firms, such as the contentious asset transfer OAS proposed that creditors unsuccessfully appealed. Furthermore, overseas creditors have encountered challenges in complex contract structures, local characteristics of ownership and registration of guarantees, cumbersome notary procedures and compliance issues.

Delegates will listen to panelists discuss Brazil's most pressing corporate restructurings and negotiations.

  • What are creditors' perceptions of "deficiencies" in US court proceedings involving Brazilian cross-border restructurings?
  • If the economy returns to strong growth, which industries will recover faster?
  • Is the worst behind the O&G and construction sectors as the Lava Jato investigations wind down?
  • What precedent did the Sao Paulo State Court of Justice set when it ruled in favor of Schahin's restructuring plan, over creditor objections, citing "labor" and "economic" grounds?
  • Examining stakeholder reaction to Oi's restructuring plans and potential impact on negotiations.
  • Discussing Samarco's prospects for restarting operations and reaching an agreement with creditors.
  • Is QGOG Constellation's bondholder agreement enough to resolve liquidity concerns?
  • Considering Odebrecht Oil and Gas's filing for the seldom-used "Extrajudicial Recovery" process. Will other out-of-court restructurings follow suit?
  • Determining which recent proposed amendments to reorganization law are most relevant and forecasting impacts on restructuring process.
  • How will 2018 elections impact corporate recoveries and economic reform?

Comparing Opportunities Between Latin America and Other Emerging Economies

Plenty has been written about regarding the growth of flow of funds into emerging market corporate debt. However, creditors have expressed concern about stretched valuations and the mispricing of risk around corporates throughout global EM. In 1H17 Latin American credits improved cash ratios and liquidity in addition to expected default rates of 3.5% (compared to global EM default rates touching 4%) and achieving an average covenant quality score at 3.00 compared to the global average of 3.50. Latin debt is also offering more spread than Asian and Middle Eastern peers in which the former provides pockets of value that careful fundamental analysis and due diligence can uncover.

Delegates will have an opportunity to listen to panelists examine how Latin American opportunities stack up against other EM credits in addition to critical relationships among the nations that make up the EM class. Discussions will include, but not be limited to:

  • How do Latin American corporates' level of leverage, profitability, interest-coverage ratios and spreads compare to other EM nations in Asia, Eastern Europe, Africa and elsewhere?
  • Are investors receiving enough incremental yield above sovereign spreads to compensate for the extra credit and liquidity risks?
  • A comparison of fundamentals - what are the factors behind the best performing local currency debt?
  • Evaluating cross-border restructurings, such as the latest in the China Fishery Group case.
  • How would a hypothetical pull back in Chinese lending affect Latin American sovereign and corporate performance? How would it impact Venezuelan sovereigns and the Peruvian mining project financing pipeline?

Conclusion of Forum

*Agenda is preliminary and subject to change.

Lead Strategic Partner

Lunch Sponsor

Venue details

JW Marriott Essex House
160 Central Park S
New York, NY 10019
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