Spreads and Ratings (a postscript)

The analysis in our original paper that I commented on in the blog (Spreads and Ratings July 26th) used data to the end of 2006. However, as many readers have commented emerging markets spreads have risen. In this Postscript I present some additional results including an analysis of what might happen to EM spreads if […]

Electricity and macroeconomics in Brazil: the end of the golden age

The fourth new energy auction in Brazil took place last Wednesday (July 26), with contracts for delivery starting in 2010. Its results (Table 1) displayed some features that deserve attention:              (i)    There was no submission of bids by hydro plants, even though two large hydro plants and one PCH had pre-qualified to participate; (ii)    The thermo […]

Overview: What Happened to the Doldrums?

The months of July and August were typically periods of low activity and early closes. This year should not have been different. The Chinese behemoth was ravishing the global supply of commodities, positioning the emerging market countries for another comfortable year. Many fund managers were taking advantage of the traditional slowdown to enjoy their summer […]

Spreads and Ratings

Ratings are up, spreads are down. Chart 1 plots cumulative upgrades for Moody’s and S&P for Emerging Markets (EM’s) and the EMBI global illustrating the dramatic increase in emerging market credit quality the reduction in emerging market spreads[1]. In this blog I want to address 3 issues:   Chart 1: Cumulative Upgrades and The EMBI […]

Sovereign Wealth Funds for Latin America?

By now it should be apparent that the hottest issue in generally hot Latin America is the furious pace of international reserves accumulation. The current level of reserves in Brazil, about US $ 145 billion, is more than double the US$ 62.7 billion level of the end of June 2006. Likewise, both Colombia and Peru […]

A Thought on Private Investment

Fellow blogger Alex Uriarte has called our attention on the issue of the quality of investment. The focus of his posting is, understandably, on public investment as this is the variety that is currently fashionable in Latin America. Governments throughout the region have, in recent years, taken a more interventionist stance and have sought to […]

Argentina’s Debt and Financing Risks

After having defaulted on its public debt and restructured its foreign obligations in aggressive terms, Argentina appears to navigate in tranquil waters far from the fiscal perils of the past.  As a matter of fact, President Kirchner has often proudly pointed out the newly acquired “independence” from the capital market and from the IMF after […]

The Misery of the “Dutch Disease and Deindustrialization” Argument

High commodity prices, abundance of liquidity, and sustained growth in Asia: all factors of good luck in the current foreign environment of Latin America, right? Not quite, according to frequent references to “deindustrialization” and “resource curse” afflicting the region as features of the international labor division that has been consolidating along the current world economic […]

Strikes in Peru

In this recent note I noted (to some people’s displeasure) that things in Peru weren’t all as wonderful as the macroeconomic numbers make out. Less than a month later, my adopted home town is about to enter its 6th day of teacher and transport strike. My wife has been too nervous to leave the house, […]