(Bloomberg) -- Goldman Sachs Group Inc. is expanding its Latin American team to boost the US bank’s fixed-income business in the region, including local-currency government bond trading and private credit.
As part of the expansion, the firm hired Juan Ocampo from Gramercy Funds Management as a managing director based in New York focusing on structured credit. It also added five vice presidents across the region in the past few months, including one in Brazil, to cover debt capital markets, structured credit and foreign-exchange derivatives and trading, as well as Mexican government bonds trading.
The plan is to keep making additional hires, according to John Greenwood and Osmin Rivera, who run the firm’s Latin America business.
“We are acutely focused on increasing market share across all of our top 150 clients, all institutional and corporate accounts,” Rivera said in an interview. “We’re also trying to increase the amount of lending and financing we do with our clients in the region, including all types of asset-secured financing, such as infrastructure-backed opportunities.”
Goldman’s plan to focus on credit, trading and derivatives follows this year’s slump in Latin American equity sales, which fell to the lowest level since at least 2013, according to data compiled by Bloomberg. This year’s total stock issuance from companies in the region dropped 3% to $8.9 billion reais, the data show.
Since 2018, the New York-based bank has increased its Latin American investment-banking team by about 40%, and went from a “more tactical approach around specific large situations” to a “more traditional and holistic model, servicing clients across advisory, financing, and risk management,” Greenwood said.
The bank was among underwriters on a sustainable $2 billion global bond from the Brazilian government, and also led a $1.2 billion inaugural offering from energy generation and distribution company Orygen Peru SAA, the largest ever Peruvian private corporate bond issue, according to the bank. Goldman also participated in some of the biggest subordinated debt bond sales for Latin American banks, including the $1.5 billion perpetual tier one bond from Grupo Financiero Banorte SAB de CV.
It also helped sell Paraguay’s inaugural dollar global bond issuance linked to the nation’s local currency, for the equivalent of $500 million.
Total Latin American international bond sales reached $122.3 billion this year, a 39% increase over last year, according to data compiled by Bloomberg.
Goldman, which has been in Brazil for 30 years and has owned a broker-dealer in Mexico for 10 years, also has a local presence in Argentina, Chile and Peru. The bank covers Colombia from Peru and New York, and is starting to trade from New York local and global bonds from smaller countries, offering foreign-exchange hedging and lending using repurchase agreements.
“We want to trade in more countries, even where we don’t have a presence, in a strategic push into what some call the frontier Latin America countries,” Rivera said.
That includes trading local bonds and foreign exchange from Uruguay and the Dominican Republic. The bank is also trading foreign-exchange products in Costa Rica and is gearing up to start trading in Paraguay. Goldman is also active in financing in Central America and the Caribbean. This is addition to trading dollar bonds from nations such as Guatemala, El Salvador, Bolivia and Ecuador.
The plan is also to expand local currency bond trading where Goldman already has a large presence, such as Brazil, Mexico, Peru and Chile.
“As these countries have diversified away from dollar issuance to local currency issuance, it has created more of a demand from local currency investors to play in those places,” Rivera said.
“A lot of our institutional clients are looking for fixed-income instruments in these countries, while corporates and multinationals that have a presence there need to hedge their foreign-exchange risk and interest-rate risk, and we’re trying to service them more as well,” he said.
The bank’s focus in the region is expanding as foreign direct investment is leaving China, Greenwood said, adding that Latin America should be the beneficiary of “a large portion of the pie.”
“Latin America is far away from global conflicts, has favorable demographics and is rich in natural resources, including minerals that are important for the energy transition,” he said. Mexico, given its proximity to the US, will be a net beneficiary of US growth, according to Rivera.
So far, high interest rates in the US have fueled outflows from emerging-market equity funds, reducing company valuations and equity capital markets activity. Elevated rates in Brazil also brought withdrawals from local hedge and equity funds, further reducing demand for stocks.
“Given public markets aren’t extremely active, we’re going to find other ways in the private market, including lending with our own balance sheet and distribution in the credit markets,” Greenwood said.
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