Latin Equity: Let the Good Times Roll

As the region’s two main stock market indexes continue to reach record highs, demand for equities has been outstripping supply. Have no fear, investment bankers say. With presidential elections over in Mexico, market players are optimistic that equity issuance in that market will be hearty in 2007. Fundraising out of Argentina and Colombia should also turn heads. Brazil on the other hand has enjoyed a very strong 2006 and is likely to see levels of issuance level off or even drop somewhat next year.

Although the Mexican market has suffered much drier spells, 2006 issuance leaves a bit to be desired. Companies raised just $1 billion compared to nearly $2 billion last year, and IPOs fell to two from four. Pedro Zorrilla, general manager of the Mexican Stock Exchange, reasons that the hotly-contested elections cast their pall. But he says there are already signs the market is coming back, with four listings in the pipeline. The bolsa is set to receive Casablanca Trust, the first offering by a FIBRA, which is a near equivalent to a real-estate investment trust (REIT). Also expected is a deal from airport manager Grupo Aeroportuario Centro Norte, which will use the tailwind of Grupo Aeroportuario del Pacifico’s March IPO to raise funds. In addition, Inter-city bus company Grupo Senda and one of the country’s top three cable companies, Cablemás, plan to come to market. The four deals should raise in the region of $600 million.

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