In april 2015, Global Evolution attended the World Bank—IMF spring meetings with three objectives:
- Country coverage: Conduct face-to-face meetings with IMF/World Bank Mission Chiefs as well as Government officials from emerging and frontier countries
- Research collaboration: Discuss joint research with IMF Research Department; planning World Bank-Global Evolution ESG Research Seminar ahead of Annual Meetings 2015
- IMF-World Bank relations: To maintain and extend our network with IMF and World Bank mission chiefs.
The firm draws these headline conclusions for five Latam countries:
- Argentina: The prospects depend crucially on two themes: A solution with the holdouts on the bonds that (temporarily) are in technical default; and the economic policy management after the elections in the end of 2015. A solution before the elections is highly unlikely—as Kirchner states: “patri o muitres”. Either winner of the elections will likely seek a solution with the houldouts. Macri seems more “market-friendly” than Scioli.
- Venezuela: Our view, backed by the dialogue in Washington, is that a default is not imminent since liquid assets to sell are around $70bn. Furthermore, Venezuela may give Jamaica a debt buyback deal similar to the one for Dominican Republic with early repayment—and they made March payments to debt holders indicating their willingness to service debt this year.
- Panama: The Panama Canal Authority is extremely well managed. They have their own constitution and governance structure like a separate state. The economy is furthermore thriving with growth likely to reach 7% over the medium term.
- Honduras: We are very positive on Honduras. IMF program progress is very convincing with quantitative targets being met with a wide margin. As an example, the fiscal deficit was 7.6% in 2014 with a target of 5.6% but the deficit ended up at 4.3%. The review in May will be very convincing. Honduras remains a positive credit story that seems to have slipped the attention of most other investors.
- Nicaragua: The Chinese government is unlikely to support the private sector investor who has intended to finance the canal. Unoffical estimates reveal a 50:50 chance that the investor will pull the plug and drop the investment. This will reduce expectation to growth, employment, and FDI going forward— while boosting the relative expectations for the same in Panama.
Global Evolution, an asset management firm specialized in emerging and frontier markets debt, is represented by Capital Stragtegies in the Americas Region.