June 1, 2000
In December 1998 it was so hard to sell Latin American project finance bonds to institutional investors that Salomon Smith Barney decided to use an insurance company guarantee to boost the credit rating of a Chilean bond issue, even though the bonds had already received an investment-grade rating. After coming to a near halt in 1998 and 1999, business is beginning to pick up again. The region's huge infrastructure needs, privatizations and strategic acquisitions in sectors such as power and telecommunications are driving demand.
However, the market for project finance bonds remains hindered by regulatory and legal issues in Brazil, and serious economic and political problems in Colombi
Demand for technology and power supplies in Latin America is luring banks back to the project finance market. Lenders are still cautious, but prospects in Brazil and Mexico look more favorable.