Bankers See Good, Bad Alternately in Outlook for Latin American Nations
Kraus, James R., American Banker
Banking markets in Latin America are split between countries where economic growth is holding up and those where it is declining, according to senior bankers familiar with the region.
Bankers at the annual meeting here of the Inter-American Development Bank said that, though prospects for countries like Brazil, Ecuador, and Venezuela appear dim for 1999, Chile, Colombia, Mexico, and Peru are doing better than expected.
"Countries such as Chile, Argentina, and Mexico that were well-advanced in carrying out market-oriented reforms and in restructuring their economies were the most resilient to external shocks," the Washington-based Institute of International Finance said in a report presented here.
Financial markets across Latin America were badly shaken by a severe economic downturn in Southeast Asia and Russia last year, prompting a massive outflow of capital from the regions and a sharp cutback in bank lending.
But in a sign of the economic split personality emerging in Latin America since the start of the year, Colombia, Mexico, and Argentina have succeeded in bringing sovereign bond issues to international capital markets, while Brazil, Latin American's biggest economy, is still unable to do so.
"The outlook is still troubling, and markets are only partially open to Latin American borrowers," said Charles Dallara, managing director at the institute.
"The reality is that for the last few years there was too much money chasing after too few investments and spreads were minimal," Mr. Dallara said.
Bankers noted that even if Latin American governments are managing to bring new issues to market Latin American corporations will not be able to do so for some time. …