Publication: Patterns of Financing During Periods of High Risk Aversion : How Have Latin Firms Fared in this Crisis So Far?
Date
2009-05
ISSN
Published
2009-05
Author(s)
Abstract
This note examines the extent to which
firms in Latin America have been able to raise capital
through debt and equity securities as well as syndicated
loans, both abroad and domestically, since the onset of the
2008 global financial crisis. The public and the private
sectors alike lost access to foreign sources of financing
during the height of the turbulence. Furthermore, two months
after the Lehman Brothers' collapse, only government
owned firms and governments themselves were able to re-enter
international markets to some extent and raise capital.
Thus, the evidence suggests an important role for government
guarantees in attracting foreign investors in times of high
risk aversion. In domestic and syndicated loan markets,
there has been a marked decrease in the total amount raised,
although they have remained a viable option for the private
sector in Latin America. To the extent possible,
non-government borrowers have been able to raise capital in
these markets and have generally met their rollover needs.
In contrast, the role of sovereign guarantees in attracting
local investors seems to have been more important in Eastern
Europe and Southeast Asia, where government entities have
accounted for respectively 80 and 44 percent of all new
issues in local markets, compared to less than 15 percent in LAC.
Citation
“Didier, Tatiana. 2009. Patterns of Financing During Periods of High Risk Aversion : How Have Latin Firms Fared in this Crisis So Far?. Latin America and the Caribbean Region (LCR) Crisis Briefs. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/6b028bb3-a097-5cce-85b4-0b9c3424847f License: CC BY 3.0 IGO.”