In face of the still-challenging macro outlook in Brazil, investors still wonder whether the worst, in terms of loan provisioning, has indeed passed, we believe that is likely the case. Continue reading Brazilian Banks: The Worst Is Behind, But Caution Still Advised
The national and international attention paid to Pemex and the oil sector has eclipsed the other half of the reform with a greater potential. In March, the government bought 2.1 GW for $2.6 billion, which will be installed by 2018. In September, it will seek to buy between $2.6 to $2.8 billion more. Starting in 2018, qualified consumers (big energy consumers that but directly in the new power market) will have to show that they consume at least 5% from clean sources.
Latin America’s major oil producers have seen declines of almost 400,000 bpd y/y. Without Brazil, production trends in the region would be more dramatic. Continue reading Latin America’s Oil Output Shocks
Summary: For all countries excluding Mexico, analysts are expecting the reversal of their tightening cycles and are trying to predict the beginning of rate cuts. Even bonds considered extremely toxic could offer an interesting opportunity. Latin America is likely to continue offering attractive returns for the time being in order to compensate investors for the region’s inherent risk.
Cemex (NYSE:CX) has reduced debt and increased profitability enabling a healthier balance sheet. USD exposure is manageable given the higher returns in the US business. Insufficient capacity for competitors in Mexico has allowed CX to regain a portion of the market share lost in recent times as cement volumes increased 12% YoY vs. the industry. Continue reading Cemex Improves Balance Sheet And Remains Attractive
We present a snapshot of Mexico’s real estate market, focusing on REITs. FUNO, Danhos, Terrafina and Macquarie are the largest FIBRAs in the market and they all went public in the past 5 years, in addition to 6 follow-on offerings. Incentive misalignment and liquidity seem to be the biggest concerns for institutional investors looking at Mexico’s public Real Estate market. Continue reading Mexico’s Real Estate Market Going Public
On average, LatAm currencies in our sample (ARS, BRL, CLP, COP, MXN, and PEN) have depreciated 20% y/y. Last year, on average, they lost almost 30% against the USD. Continue reading Latin America’s Forex Compass