Making a Market

Jul 1, 2004

Creating an active secondary market for Latin American corporate debt is an old, unfulfilled dream. André Madarás, who heads the proprietary desk and fixed income trading at Brazil's Banco Itaú, thinks it is possible to change that.

Is liquidity really returning to the Latin American corporate bond market or is this a transitory phenomenon?
Demand for Latin American corporate debt has been growing over the last 18 months, since interest rates in the US are still quite low. International and local investors are looking for alternatives to Latin American sovereign risk.

Where is demand coming from?
We are seeing a lot of interest from international hedge funds, asset managers, foreign private banks and offshore Brazilian investors. We launched a self-service page on Bloomberg in May, which makes trading corporate debt easier and faster than over-the-counter trading. Pricing can become more competitive as trading becomes more efficient, and this should drive liquidity. We are already seeing trading volumes rise and new clients coming into the market.

What kind of assets are they buying?
They are mostly interested in euro- and dollar-denominated bonds from Brazil's largest banks and companies....

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