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EMTA Forum in Miami - Jan. 22

Tuesday, January 22, 2019 

Sponsored by 

marketaxess latest 031418 

InterContinental Hotel
100 Chopin Plaza
Miami, FL 

3:30 p.m. Registration 

4:00 p.m. Panel Discussion
Prospects for the Emerging Markets
Alberto Bernal (XP Investments) – Moderator
Gustavo Dominguez (AdCap)
Rafael Elias (Exotix Capital)
AJ Mediratta (Greylock Capital Management)
Jeff Norton (Mizuho Securities USA LLC)

5:00 p.m. Cocktail Reception 

Additional Support Provided by AdCap, Exotix Capital, Mizuho Securities USA LLC and XP Investments. 

We regret that this event is not open to members of the press. 


Registration is now closed. 

We look forward to seeing you at a future EMTA event. 

EMTA Miami Forum Reviews LatAm Economic Prospects  

“2018 was a very difficult year for us, not because we didn’t do our homework, but because it was a year that included things that were impossible to predict, like the trade war,” summarized Alberto Bernal of XP Securities in introductory remarks at EMTA’s Forum in Miami. The event was held on Tuesday, January 22, 2019 and sponsored by MarketAxess. Additional support was provided by AdCap, Exotix, Mizuho Securities USA LLC, and XP Securities.

Bernal speculated that a “Goldilocks” scenario could re-emerge in global finance. In his view, there would be no further US FOMC rate hikes, a de-escalation of the trade war (due to domestic US pressures), a strong Chinese stimulus package, and a decline in the US dollar.

Jeff Norton (Mizuho Securities USA LLC) noted that in his view the US rate-hiking cycle was reaching its final stage, with a further increase only in the second half of 2019, and with the US 10-year treasury bond yielding close to 3% at year-end. Additionally, he expressed concern at downside risks to European growth, and saw the dollar index not far from current levels at end of 2019.

Bernal next steered speakers through the major LatAm economies. “It’s hard for me to be positive on Mexico in the long-run,” rued Rafael Elias (Exotix), while, in the short-term, lauding the country’s current budget, which he specified had been, “prepared by the outgoing administrative team, which was quite capable.” Elias believed that, eventually, the lack of funds to finance President AMLO’s ambitious social spending goals will become obvious. “For now, ride the wave as long as it lasts,” he recommended, while warning investors that 2020 was likely to be “dire.”

AdCap’s Gustavo Dominguez reviewed Argentina’s prospects. On the positive side, he noted that, “the peso is no longer expensive, a good part of the crisis has passed, and the country now has a war chest to pay its debts.” On the other hand, the 2019 elections and the global environment pose serious risks. He warned that there was a “clear path” for a moderate Peronist to beat President Macri in the upcoming vote, which would likely lead to a sell-off. Norton pointed out that Macri’s approval ratings are now above 50%, and if the economy were to bottom out, but then start to rebound before the vote, the president’s chances for re-election would be boosted.

Norton commented that, “a lot of good news has been priced into Brazilian bond prices.” He cautioned that the country “still has a lot of work to do,” after the failure to address fiscal problems during the Temer administration, and he didn’t foresee a rating upgrade. Norton estimated Brazilian growth at 2% in 2019, with the Central Bank remaining accommodative through mid-year.

AJ Mediratta (Greylock Capital Management) pointed out that thus far, four legal cases have been filed against the sovereign. Most of the legal actions so far appear to be exploratory in his view, testing potential jurisdiction venues. The bondholder committee that his firm was co-leading (along with T. Rowe Price) had not taken legal action because of the practical issues of attaching Venezuelan assets held abroad, he stated. “Eventually, this will be resolved,” as he highlighted the country’s huge potential, due to its vast oil reserves – which exceed the rest of Latin America combined. Mediratta confirmed that the bondholder group owns at least a 25% “blocking stake” in most of the bond issues. Bondholders remain sympathetic to the plight of the Venezuelan people, but he stressed that a future administration will need to work with creditors, not “steamroll them” if they wish to regain access to foreign capital. Finally, he highlighted the innovative debt recovery instrument attached to the proposed Mozambique restructuring, and suggested it could be a precedent for a future deal with Venezuela.

Looking forward, Elias expected a resumption of the primary market in 2019, as “interest rates are conducive to new prints,” as well as with lower inflation in LatAm generally. Corporates such as Petrobras, Pemex, CVRD and YPF were all likely to issue new debt, although several speakers, including himself, Bernal and Mediratta, expected Pemex to underperform.