Publish in Analysis - Wednesday, December 18, 2019
Brazil's Congress (photo) passed the historic pension reform in October. (Photo: Mario Roberto Duran Ortiz)
The best news in Latin America business in 2019.
BY LATINVEX EDITORS
The best events in Latin American business this year, according to Latinvex editors.
#1 USMCA Closer to Reality
After renewed uncertainty about U.S.-Mexican trade, the year ended with the United States-Mexico-Canada Agreement (USMCA) inching closer to U.S. Congressional approval.
“The new USMCA is really 90 percent NAFTA,” Christopher Wilson, Deputy Director of the Mexico Institute at the Wilson Center, told PBS.
“And that's actually the most important thing here is that what happened is that this cloud of uncertainty about the future of NAFTA, the possibility that the president might withdraw from NAFTA, goes away with the agreement around the completion of the USMCA.”
Despite criticism that USMCA is actually worse than NAFTA, many see it as better than the alternative – no U.S.-Mexico trade agreement, as could well have been the result thanks to the anti-NAFTA and anti-Mexico bias and protectionist policies of President Donald Trump.
#2 Brazil Pension Reform
In October, Brazil’s Congress passed a historic pension reform, which aims to generate savings of 800 billion reais (US$197 billion) over the next decade through a range of measures like raising the retirement age and increasing workers’ contributions.
While, investors and ratings agencies now await other promised reforms (including tax reform), the approval of the pension bill came after years of failed attempts, including by the previous administration of President Michel Temer.
#3 TAG-Engie Deal
In April, a consortium led by French utility Engie agreed to pay $8.6 billion to acquire Brazilian pipeline company TAG from state oil company Petrobras.
It was by far the largest deal in Latin America this year and cemented Brazil as the top M&A market in the region.
#4 XP IPO
Earlier this month, Brazilian broker-dealer XP raised $2.25 billion through a NASDAQ initial public offer, with demand equivalent to 14 times the offering, according to Reuters.
The IPO was the largest this year in Brazil and Latin America, according to Latinvex data and helped offset a lackluster year.
#5 Colombia, Ecuador Oil Auctions
While Mexico under President Andres Manuel Lopez Obrador has virtually halted all new auctions for private and foreign oil companies, Colombia and Ecuador this year presented good opportunities.
Colombia held two auctions that combined are expected to generate $1 billion in investments.
Meanwhile, Ecuador's state-run oil company Petroecuador awarded a unit of Royal Dutch Shell a contract to lift some 20.2 million barrels of Oriente-grade crude between 2020 and 2023 in a deal expected to bring in some $950 million, Reuters reported.
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