Today’s infrastructure financing depends more on Multilateral Agencies, and their volumes of loans have increased significantly in recent years.
Partnering with a local trusted partner that provides insight in dealing with foreign laws and regulations can prove invaluable. Citi Agency and Trust, your trusted global bank, has the biggest network presence in Latin America with presence in the entire region. The unique knowledge of local markets, the depth and breadth of our experience and the standards of a global bank are just some of the key advantages in working with Citi Agency and Trust. We provide a full suite of Corporate Trust products that can be tailored made to attend your needs.
2. Agenda
Opening Remarks
Rafael Cardenas
Citi’s partnerships with Multilateral Agencies
Alan Smith
Panel Discussion: Corporate Trust Services for Multilateral Agencies in Latin America
Ernesto Sarria
Profile of the Trustee in Panama
Use of ‘CKDES’ for Infrastructure Projects in Mexico
Business Sectors Driving Growth in Argentina
Mandatory Legal Reserve for Local Currency Deposits of Foreign Financial Institutions in Peru
Tax on FX for Non-Residents - IOF in Brazil
Foreign Exchange Regulations that apply to Offshore Accounts Opened by Fideicomisos (Trusts) in
Colombia
Cross Border Capabilities
Rafael Cardenas
Issuer Services Business Head for Latam
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4. Executive Summary
Citi is a partner of choice for Agencies and clients
– Citi has a strong global presence across Asia, Latin America, Europe, North America,
Africa and the Middle East
– Our integrated corporate banking, capital markets, and transaction services capabilities
provide our clients and Agency partners with consistent solutions globally
Continued need for Agency support in Latin American market
– Even as financial markets improve, Latin American companies are still looking to
Agencies to support their large scale capex and working capital needs
– There are numerous opportunities for investment in oil & gas, power,
telecommunications, financial institutions, mining and infrastructure sectors
Collaboration opportunities between Official agencies and Citi
– Citi continues to work with Official Agencies to financings across Latin America for both
corporates, public sector clients and financial institutions
– Citi maintains a rich pipeline of infrastructure, energy and mining projects across the
region that could benefit from Agency support
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5. Agency Partnerships
Global presence across over 100 countries
Unparalleled agency financing expertise developed
through long relationships with over 60 agencies
globally
Leadership in the arrangement of multisource
financing with ECAs, MLAs and DFIs
Broad industry experience:
Citi’s global franchise and agency finance expertise enables Official Agencies to reach an unmatched client
base worldwide, with a consistent working partnership approach
Collaboration with Citi:
Its long and deep presence in Latin America
makes Citi an ideal partner for Official Agencies
Official Agencies can leverage Citi’s relationships
with corporates, public sector clients and financial
institutions in Latin America to facilitate business
with key players in the region
The need for large investment in infrastructure
continues to be a major focus for Latam
governments
Official Agencies may provide support through
partial credit guarantees or buyer credit
guarantees to increase the credit quality of these
transactions in order to attract a broader set of
investors
*Industry chart represents 2008 transaction for EAF Latin America.
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6. Recent Experience with Multilateral Agencies
Peru LNG
Onshore and Offshore
Collateral Agent
Itumbiara, Ituiutaba and
Campina Verde Projects
Collateral and Depositary
Agent
Asian Development Bank
Issuing and Paying Agent
The International Bank for
Reconstruction and
Development
Issuing and Paying Agent
4
8. Agenda
Profile of the Trustee in Panama
Sheyla Soto
Use of ‘CKDES’ for Infrastructure Projects in Mexico
Manuel Paullada
Business Sectors Driving Growth in Argentina
Manuel Tristany
Mandatory Legal Reserve for Local Currency Deposits of Foreign Financial
Institutions in Peru Alejandro Espinel
Tax on FX for Non-Residents - IOF in Brazil
Andre Pina
Foreign Exchange Regulations that apply to Offshore Accounts Opened
by Fideicomisos (Trusts) in Colombia John Rojano
Cross Border Capabilities
Paul Burke
Ernesto Sarria
Moderator
1
9. Profile of the Trustee in Panama
Panamanian trusts are regulated by Law #1 and Executive Decree #16 of 1984:
– Independent trust companies, insurance companies, banks, lawyers and other natural or
juridical persons may act as trustees.
Only those trustees that conduct the trust business professionally and customarily (3 or
more p.a.) shall obtain a fiduciary license from the regulator, the Superintendence of Banks
of Panama (SBP).
– Licensed trustees shall maintain a guarantee in the amount of US$250,000 to assure the
compliance of obligations. Not less than 10% of the guarantee shall consist in restricted
deposits at any of the two Panamanian Public Banks.
– Corporate trustees shall have their stock shares issued nominally, and every transfer of
shares requires the prior approval of the SBP.
There are more than 60 licensed trust companies, and the number is growing every year,
with a total of US$8.4 billion of assets under trust.
Citi is present in Panama since 1904 and has been offering fiduciary services in this country
for more than 16 years.
Sheyla Soto
Citibank, N.A. Panama Branch
7
10. CKDES are securities recently developed by the Mexican Capital Markets oriented to:
• Enhance the infrastructure development in Mexico
• Capture part of the huge liquidity of domestic public pension funds (Afores) by offering new
asset classes in structured finance products
• Support other sectors such as Real Estate or more diversified via Private Equity investments
Use of ‘CKDES’ for Infrastructure Projects in Mexico
MAIN CHARACTERISTICS
Trade publicly in Mexican Stock Exchange
Returns linked to underlying asset/investment
Does not require principal and interest payments
Corporate Governance transparency
Investments according to a specific calendar and policies
Oriented to QIBs mainly Afores and to lesser extent Insurance
Companies and Private Pension Funds
No ratings required
Daily price valuations provided by price vendors
Assets form part of a Trust Estate and Trustee issues the CKDs
MARKET REQUIREMENTS
Attractive and sustainable Business Plan
Manager/operator with successful track-record
General Partner considerable co-investment
Anchor investor participation
Defined exit strategy
Attractive risk – reward relation
Total Assets Under Management by
AFORES (oct 10’)
$111,544 billion
Allowable funds to be invested in CKDES,
and other Structured Financial Securities
$13 billion
** Source: Consar
Note: USD Figures with an Exchange Rate of MX $12.70
Manuel Paullada
Fiduciario Banamex
5
11. Nine Closed Transactions in Last 12 months – $1.9 billion
SPECIFIC PROJECTS INFRASTRUCTURE
RCO Macquarie Wamex Atlas Discovery Nexxus Capital Promecap AMB Prudential Artha Capital
ASSETS
Toll Roads Construction
contracts/
projects
Diversified Middle
Market
Service &
Consumer
High Growth
Financial, Health,
Education &
Consumer
Airports,
Distressed
Assets & Credit
Portfolios
Industrial &
Logistics
Industrial,
Residential &
Retail
Land Developers
for Housing,
Tourism &
Commerce
$516MKT VALUE (MM)
MATURITY 28 10+2+2 10 10+1 10+1+1 10 10 10+2 10
CO-INVESTMENT
*ICA & GSIP will
Invest $160
5%
2% of the SPV
Investments
2% of the SPV
Investments
2.5% of the SPV
Investments
10% Issued amount 20% 20% or up to MX $600 5%
** Source from Purchase or Underwriting Agreements
Note: USD Figures with an Exchange Rate of MX $12.70
PRIVATE EQUITY FUNDS REAL ESTATE
$269 $59 $91 $115 $197 $260 $244 $192
INFRASTRUCTURE
Navix
Energy project
(Pemex-CFE)
MBIA
Diversified
Marhnos
Residual
Water Plants
Infraestructura
Institucional
Roads, bridges,
ports, schools,
hospitals
Protego
Water, transport,
environmental,
communications
REAL ESTATE
Vertex
Housing
Alsis
Housing
IGS
Industrial, offices,
distribution
Grupo Lar
Public social services,
water,
communications
PRIVATE EQUITY FUNDS
EMX Capital I
Diversified -
Growth
Alta Growth Capital
Consumer, Financial
Education, Healthcare,
Entertainment
Pro Equity
Education, Energy,
Healthcare
Strong Pipeline more oriented to Infrastructure
Use of ‘CKDES’ for Infrastructure Projects in Mexico
Manuel Paullada
Fiduciario Banamex
6
12. Business Sectors driving of growth in Argentina
Argentina has the sixth largest reserves of minerals in the world, behind China, Peru,
Philippines, Brazil and Chile):
– Today there are twelve mines that are currently operating, three under construction and
around 400 prospects at different stages of development
– In 2011 two projects will commence operations: Pascua-Lama (Barrick Gold) and Potasio
Rio Colorado (Vale), doubling GDP from around 2% in 2010 to around 4% by 2011
– Main exports are gold, copper, aluminum and silver, which represent around US$4.4
billion or 6.0% of total annual exports
– The key aspect why Argentina is expected to be a key player in mining is because of the
fiscal and other benefits granted to mining activities by the Mining Investments Law of
1994 and supplements
Recuperation of the international market for Biodiesel due to the price increase
– Production of Biodiesel has grown 4-fold from 660M tons in 2007 to 2.4MM tons in 2010.
– New government regulation increased the use of Biodiesel in mix of gasoline
– Advantages of Argentina as a producer of Biodiesel
Most advanced soy producer in the world (5.5% of global market)
Record soy crop with 52.7 MM tons
Manuel Tristany
Citibank, N.A. Argentina Branch
2
13. Mandatory legal reserve for Soles deposits of foreign financial institutions in Peru
Peru's Central Bank increased the mandatory legal reserve requirement for foreign banks
depositing local currency in the domestic banking system to 120% from 65% effective
September 1st:
– Central Bank has been managing the mandatory legal reserve levels as part of its
monetary policy
– Peruvian Nuevos Soles reached a two-year high in August vs. the US Dollar.
The measure seeks to deter "short-term speculative funds" from entering the Peruvian
financial system and destabilizing the currency, affecting all capital inflow even in cases
when funds are not speculative in nature.
With a strong economy based on mining, energy and fishing, and a managed budget, Peru
has become a renowned attraction for foreign investors.
Citi local expertise provides an efficient solution to foreign investors managing local projects
with structures that require to raise capital in foreign markets.
Citi Agency and Trust can structure solutions that would allow to Foreign Financial
Institutions to have Peruvian Soles as collateral for Project Finance or Collateralized
Lending transactions without having to worry about the mandatory legal reserve or its
associated cost.
Alejandro Espinel
Citibank del Perú S.A.
8
14. Brazil IOF – Tax over Financial Transaction
IOF tax is applied over a range of different financial transactions
Short Term Investments
– Tax rate decreases as the tenor of the investment increases.
– Tax doesn’t apply for investments over 30 days
– The tax applies over the earned interests
FX (Regulations & Norms: Decree No 6.306/07)
– 4 different type of FX taxes apply depending on the activity:
Export of goods and services
Import of goods and services
Inflow from financial-related deals
Outflow from financial-related deals
– Currently, most foreign exchange transactions are taxed at the rate of 0.38%
Companies which have dollars account in Brazil are waived of this fee
Andre Pina
Citibank Brasil S.A.
* This material should not be considered as a tax advice, as for the correct definition and calculation of taxes na indivudual analysis
of the transaction by customer is necessary. Banco Citibank S.A. is not authorized to perform tax advisory to its clients. Specific
cases should be evaluate by customers with their own tax specialists.
3
15. FX Regulations that apply to Offshore Accounts of Fideicomisos in Colombia
In Colombia the Central Bank is responsible for Exchange Regulations and managing,
recording and authorizing changes in foreign investment
The regulations allows Trusts (Fideicomisos) to open and administer offshore accounts (in
foreign currency) and register them as ‘Compensation’ accounts for collection of export
receivables and debt service payments
The opening, managing and closing of ‘Compensation’ accounts are subject to the reporting
requirements of the Central Bank of Colombia and the Direction of National Taxes and
Customs (DIAN, for its acronym in Spanish)
Citi has the ability to open DDA accounts in New York and register them as ‘Compensation’
accounts in order to be authorized to make payments to foreign suppliers and make
reserves and loan payments for a Project Finance transaction
Citi has the ability to make the reports for the Colombian Central Bank according the
Foreign Exchange regulation. Few fiduciaries companies in Colombia have this capability
John Rojano
Cititrust Colombia S.A.
4
17. 17
Agency & Trust is No. 1 in Service Month after Month
Agency & Trust has consistently been a top performer in DTCC’s Industry Report Card
Legend: 1 = Best 6 = Worst Latest DTCC ranking: May 2010
Rates Open at COB
P/D - 1
Late Rates after 3:00
pm Cut-off on P/D
Amended
Announcements
Amended
Announcements 30
Days + after P/D
Bank of America 4 1 6 6
Bank of New
York Mellon
6 6 4 4
Citibank 1 1 1 1
Deutsche Bank 2 4 5 5
US Bank 2 1 1 3
Wells Fargo 5 5 3 2
Current DTCC Agent Report Card
Rankings based on a percentage of an agent’s total rates
– Best three in each category highlighted in blue
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18. Lima Airport Partners
Trustee and
Collateral Agent
Uirapuru
Collateral Agent and
Depositary Bank
Peru LNG
Onshore and Offshore
Collateral Agent
Select Latin America Transactions
ATE Project Finance
Collateral Agent
Itumbiara, Ituiutaba and
Campina Verde Projects
Collateral and Depositary
Agent
Transportadora de Gas del
Peru
Collateral Agent and
Trustee
IIRSA Norte, IIRSA Sur
Tranches 2 and 3
Trustee, Indenture Trustee,
Issuing and Paying Agent,
Registrar, Comparison
Agent
Survial
Trustee and
Verification Agent
Petrobras Revap / Refap
Collateral Agent and
Depositary Bank
Terminal de Contenedores
de Buenaventura
Collateral Agent and
Trustee
Panama Canal Railway Co.
Collateral Agent, Trustee,
Registrar and Paying Agent
Tenedora Nemak
Collateral Agent
Sociedad Minera Cerro
Verde
Onshore and Offshore
Collateral Agent
Votorantim purchase of
equipment from Sinoma
Escrow Agent
Indiana Toll Road
Trustee
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