The high liquidity of the banking system in Uruguayas well as the context of high interest rates are challenges facing the development of the capital market in the country, although the path of opportunities is also vigorous.
They agreed on this Jose Luis Rialfinancial manager of Conaprole; Gonzalo Bava and Ignacio RivelaCFO and Head of Capital Markets of the Santander Bank respectively, during a debate promoted by the rating agency Moody’s under the slogan “Uruguay: a Dialogue on Challenges and Opportunities”, in which he participated Ambit.
Bava, who highlighted the recent push that the issue has had from the Securities Market Promotion Commission, assured that there is ground on which to advance in the Uruguay because “customers have become more sophisticated.” “Local investment funds are being created because there is beginning to be demand from clients. “People are looking for options in the context of high rates,” she noted.
He highlighted, however, that what constitutes a strength of the Uruguayan banking system, such as its high liquidity, is also an obstacle to the development of a securities market since the response of financial entities when granting credit is much more agile. “Compete with the banks having the times of the Central Bank of Uruguay It is a challenge,” he said in reference to the administrative times that require the implementation of market options.
The context of high interest rates – which arose as a response by central banks to soaring inflation and which will remain for some time, according to analysts at Moody’s– also makes other types of capital placements more attractive.
Given this, the managers of Santander bank propose designing the products according to each sector of the market to which it is intended. “We cannot run before we walk. We have to be encouraged and assume the costs,” they reflected.
In that sense, they highlighted the growth of trusts as financing tools for state actors –Ancapfor example, plans to issue debt in this way to finance the shutdown of the La Teja refinery and that of the Negotiable Obligations (ON)as an option that many companies in the Uruguay have not yet employed.
For José Luis Rial, who years ago took on the successful program of Withsavings in the dairy cooperative, “Uruguay needs an intermediate vehicle” in promoting a local capital market. For this he proposed the creation of closed investment fundsthat buy the ONs of medium or small companies and that allow long-term financing.
The financial manager of Conaprole highlighted that the “large projects that arrive in the country come with the assembled package, they are not financed in the local system.” On the other hand, local financing needs are often covered “with very agile banking, very available to companies,” which makes the development of a capital market difficult.
Source: Ambito
