Debtwire Emerging Markets Investors Summit 2016

The Intercontinental Barclays

Unsurprisingly, the US election of Donald Trump as President prompted investors to sell off emerging market bonds around the globe. Investors sold almost USD 5bn of bonds in Asia’s local-currency debt markets alone in the first week following the election results. The Bloomberg Barclays Emerging Markets Hard Currency Aggregate Index logged a 3.65% loss since Nov. 8, erasing almost a third of 2016 gains and nearly nullifying net inflows into debt funds that hit record highs over the summer. However, some view the market action as a buying opportunity while others have become more cautious about underlying fundamentals.

Relative political calm in Brazil, tepid Chinese markets, stable commodity prices, and structural reforms that have seen EM governments accumulate less dollar debt, build up foreign reserves and adopt flexible exchange rates to obviate mistakes from the 1980s and 1990s crises have instilled confidence. Investors have favored Latin America and Asia over Central and Eastern Europe because of tight spreads and strong fundamentals.

Some U.S. fund managers have begun shifting allocations to local currency debt, depending on the market. Interest rate policy throughout developed markets (DM) will help maintain favorable exchange rates with that of EM. Stabilization in oil and other commodities have certainly helped certain EM nations with trade imbalances while the strongest domestic oil & gas and mining operations begin repairing balance sheets through output adjustments and recapitalizations. What remains to be seen is how effective EM court systems are in administrating the bankruptcy process. Lastly, what can be learned from the Ukrainian sovereign debt restructuring and multiple Brazilian corporate restructurings?

  • Agenda

    • 08:30

      Registration & Coffee

    • 09:00


    • 09:10

      Keynote Session

      Bill  Brandt
      Bill Brandt
      Executive Chairman, Development Specialists Inc.
    • 09:30

      Surveying Risks and Notable Structural Reforms Throughout Emerging Markets

      Witnessing the decline of the Venezuelan and Turkish economies over the last 15 years many emerging market nations decided to embark on market-friendly reforms and structural changes.

      In India, Prime Minister Narendra Modi approved changes in June that opened the country to greater foreign investment, passed key reforms to tax law, and now the world’s largest democracy is growing faster than China. Similarly, Mexico, Argentina, Indonesia, Vietnam, Sri Lanka, Bangladesh, and some others have been notable reformers, presenting debt investors with various opportunities. In yield-starved markets its no wonder investors are chasing EM sovereign yields averaging 4.99% (YTM) and corporate average yields of 5.28% (YTM), according to the Bloomberg USD Emerging Market Bond Index. Meanwhile, risk remains in countries such as Hungary, whose Expected Default Frequency, a proprietary metric of Moody’s, is the third worst among emerging markets. The prospect of the Fed raising rates, another potential bear market in commodities, and economic trouble in China present EM fixed-income investors with challenges.

      • Examination of what assets are attractive and what is driving primary issuance in respective EM regions.
      • Assessing India’s newly reformed bankruptcy codes’ impact on domestic distressed strategies and foreign investors priority of claims. 
      • China - Will next year’s political leadership turnover bring reform and examining solutions to the NPL problem that may include write-downs, securitization, debt-equity swaps and QE stimulus?
      • Outlook for US Fed liftoff and impact on emerging markets.
      • Discussing political will for structural reforms – to what extent do incumbent politicians possess incentives to tackle issues as they balance near-term costs against long-term benefits. 
      • Trajectory of commodities and measuring sensitivity to various markets.
      • Gaining perspective on which EM nations are administering bankruptcy procedures in a more orderly fashion than others.
      Roger  Horn
      Roger Horn
      Director - Global Fixed Income Division, MacKay Shields
      Joseph Julian
      Joseph Julian
      Managing Director, Houlihan Lokey
      Kris  Kowal
      Kris Kowal
      Managing Director, DuPont Capital
      Tolga Uzuner
      Tolga Uzuner
      Partner and Global Head of Emerging Markets, Apollo Global Management
      David Graves
      David Graves
      Senior Reporter, CEEMEA Restructuring, Debtwire
    • 10:30

      Coffee Networking Break

    • 11:00

      SE Asian, CEEMA in and out of Court Restructuring and Bankruptcy Lessons

      There is still much speculation regarding how well modern bankruptcy laws, some more than a decade old, will treat creditors in the current business cycle. As defaults pickup from sagging economic activity and less demand puts downward pressure on commodity prices creditors are assessing their options in pushing Asian and CEEMA domiciled companies into out-of-court restructurings or bankruptcy.

      Delegates will hear from panelists discuss the latest court rulings and restructurings.

      • Discussing Eastern European restructurings - what can be drawn from the experience to date, and what the future might hold?
      • Analyzing sovereign guarantees and what recourse do investors have in holding governments accountable – an assessment of Mozambique.
      • Local laws, local courts, foreign creditors. Navigating legal systems with untested restructuring laws.
      • Recent restructurings in Ukraine, the Middle East and Central Asia

      Tom  Astle
      Tom Astle
      Partner, Hogan Lovells
      Marco  Lukesch
      Marco Lukesch
      Portfolio Manager, Pine River Capital Management
      Andrey  Popel
      Andrey Popel
      Assistant Portfolio Manager, Nomura Corporate Research and Asset Management Inc.
      John  Bringardner
      John Bringardner
      Global Legal Editor, Debtwire (moderator)
    • 12:00


    • 01:30

      Keynote-Sponsor Presentation

      Aaron  Cutler
      Aaron Cutler
      Partner, Hogan Lovells
    • 02:00

      Will Brazilian Woes Continue?

      Political corruption, carelessness with the fiscal purse, and commodity prices have slowed Brazil’s emergence as a regional juggernaut. While the country’s legislative body and political pressure groups sort out the mess from the impeached Rousseff administration the economy continues to suffer. Many Wall St banks continue to be bearish on Brazilian growth prospects though some legislative reform and a pause in the piggybank-like treatment of Petrobras may signal change. The country has witnessed a series of bankruptcies such as Oi SA, Sete Brasil, Abengoa Brasil, Lupatech SA, Wind Power Energia SA, and Groupo Schahin, which has tested the durability of the bankruptcy court system. What are lessons to be learned from these proceedings and from out-of-court settlements?

      Adding more doubt, Brazil’s Monetary Policy Committee may cut interest rates faster than expected, impacting debt and currency markets.

      Delegates will hear panelists discuss the evolving political situation and its impact on debt markets.

      • Lessons from the Oi restructuring and others and what to expect from future defaults.
      • Exploring bankruptcy court's lack of cross-border process of Brazilian corporate subsidiaries abroad – a special look at oil rig venture Sete Brasil Participações SA.
      • Examining foreign creditors' treatment in bankruptcy proceedings – bank debt vs. bond, priority of claims, and assessment of utilizing fiduciary liens to avoid bankruptcy court.
      • Discovering where the next vulnerable sectors are emerging?
      • Fiscal and other reform on the way? - judging interim President Michel Temer's promise of delivering reforms.
      • Assessing attractiveness of Brazilian firms selling dollar-based products with local currency costs.
      Daniel  Freifeld
      Daniel Freifeld
      Founder, Callaway Capital Management
      Robert L. Rauch
      Robert L. Rauch
      Senior Partner and Emerging Markets Portfolio Manager, Gramercy Funds Management
      Jacob  Steinfeld
      Jacob Steinfeld
      Managing Director, J.P. Morgan Emerging Markets Credit Trading
      Ben  Miller
      Ben Miller
      Managing Editor- Latin America, Debtwire (moderator)
    • 03:00

      Coffee Networking Break

    • 03:30

      Latin American Trend Trajectories: Corporate Bond Market, Default Lessons, and Economic Growth

      The Latin American region is certainly a mixed bag of upside and downside risk. While Venezuela crumbles and reverberations continue to be felt by Brazilian political corruption many opportunities exist. The mismanaged economy of Argentina continues to make strides and reforms under the leadership of the Macri administration while all eyes turn to Venezuela's scheduled coupon payments. Many investors holding onto collateral are wondering how decades old bankruptcy laws, which remain largely untested, will function once defaults begin to tick up, especially in cross-border situations. What can investors learn from the two-year ongoing bankruptcy saga of Mexican oil service provider Oceanografia and its eventual liquidation? Also, questions are emerging around if it is easier to enforce one's rights in priority of claims as a creditor domiciled in a developed or emerging market?

      Delegates will hear about the direction the region is heading, opinions on future economic growth, and debt market opportunities.

      • Exploring any opportunity left among Venezuelan sovereign and quasi-sovereign bonds and what are possibilities for debt renegotiations.
      • How long will the rally in Argentina continue and lessons learned from sovereign debt restructuring?
      • Examining Banco Base's attempts to force Abengoa Mexico into bankruptcy and what investors should know in creditor-led involuntary bankruptcies.
      • Gleaning insight from Pacific Exploration restructurings, Empresas ICA default recovery, Oceanografia liquidation, and restructured Mexican and Brazilian drill ships.
      • Outlook on the oil & gas and raw materials sectors while measuring nation-state sensitivity.
      • Discussing if Venezuela evolves into a distressed situation and analyzing 2016/17 coupon payments.
      Fernando  del Castillo
      Fernando del Castillo
      Partner, Santamarina y Steta
      Maurice  Horwitz
      Maurice Horwitz
      Vice President, Associate General Counsel, AIG
      Shamaila  Khan
      Shamaila Khan
      Portfolio Manager—Emerging Market Corporate Debt, AllianceBernstein
      Daniel  Sensel
      Daniel Sensel
      Senior Analyst, Warlander Asset Management
      Pablo  Domínguez
      Pablo Domínguez
      Reportero, Debtwire (moderador)
    • 04:30

      Conclusion of Forum