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. Argentina and Venezuela are headed in opposite directions with the latter heading into negotiations to restructure its overwhelming debt with international creditors while the former enjoys the fruits of reform. 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.
Registration and Breakfast
Resilient Mexico Still Under Threat
Fears about Mexico’s economy have receded since last year, but uncertainty remains as 2017 draws to a close. A stabilized peso and commodity prices and improving current account deficit, have helped, but a difficult NAFTA renegotiation remained, ahead of Presidential elections in 2018. In the corporate space, Empresas ICA is testing the bankruptcy framework with a pre-pack restructuring, and oil services providers Oro Negro and Offshore Drilling Holding were headed toward restructurings. However, several new corporates have taken advantage of borrowing conditions in the bond market so far this year. Bucking concerns about the NAFTA renegotiations, investors are especially excited about opportunities in the communications, financial services and manufacturing sectors.
Listen to panelists discuss the economic and restructuring environment throughout Mexico:
- 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 can Oro Negro’s creditors expect to recover following its surprise bankruptcy protection request in September?
- 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 Re-Emergence of the Argentine and Andean Economies
A wave of corporate and provincial borrowers has followed the Argentine government’s re-engagement with the international debt markets last year, and tightening spreads since then have already brought investors rewards. Will President Mauricio Macri be able to continue his reform agenda? The normalization of copper price trends has stabilized the Peruvian sol (PEN) and Chilean peso (CLP) while the Colombian peso (COP) continues to be volatile. 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. Venezuela’s economic crisis and social unrest have continued this year, leaving investors wondering what recoveries will look like once the nation restructures its debt.
Delegates will have an opportunity to hear about the risks and rewards in credit throughout Argentina and the Andean region.
- 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?
- Andino Investment Holding and Ajegroup are among the borrowers that 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 the Venezuelan political turmoil mean for debt service obligations? Are US sanctions affecting the country's debt servicing? Is there any chance for a change in government? What is to be expected from a restructuring of Venezuela's debt?
- What would the ripple effects from a Venezuelan default look like?
- Explore Chilean bus company Inversiones Alsacia's bankruptcy case vs. its failed US Chapter 11 hearing.
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.