26 January 2009
Emerging Market Corporates
EM 2009 Corporate Liquidity
Analysis
Deutsche Bank Securities Inc.
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Industry Update
Research Team
Anne Milne
Research Analyst
(+1) 212 250-7568
anne.milne@db.com
Marcelo Menusso
Research Analyst
(+1) 212 250-6135
marcelo.menusso@db.com
Oksana Reinhardt
Research Analyst
(+44) 20 754-77018
oksana.reinhardt@db.com
Summary EM Corporate Liquidity
0.9x
0.3x
2.3x
1.8x
1.5x
1.0x
0.6x
0.2x
4.4x
3.5x
0.8x
0.5x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
4.5x
Arg. Br Mx Ch Other
Latam
EMEA*
Cash/STD (Cash-Min. Capex)/STD
Summary EM Leverage by Country
0.9x
0.7x
0.6x
1.3x
0.8x
0.7x
0.0x
0.2x
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
Arg. Br Mx Ch Other
Latam
EMEA
Emerging Markets Global Markets Research Credit
This report summarizes the liquidity of major bond issuers in EM
A main concern of investors and rating agencies around the globe is the liquidity
situation of bond issuers and their ability to meet short-term debt (STD) payments
over the next twelve months. This is particularly true of higher yielding and lower
rated names, as well as issuers in countries where there may be a strong degree
of government involvement in refinancing decisions (Russia, Argentina, Kazakhstan
and Ukraine). We have used figures as of September 2008 when available.
Countries with the strongest corporate liquidity ratios are Mexico and Brazil
These countries show that bond issuers had cash balances at 30-Sept-08 greater
than short-term debt maturities. In both countries, this is still true when we
subtract maintenance capital expenditures (we assume 50% of depreciation &
amortization) from cash balances before dividing by the short-term debt balances.
This implies that these countries can service debt even through a prolonged period
without availability of the capital or loan markets. In the case of Mexico, the basic
liquidity ratio (Cash/STD) is 1.5x, while the more burdensome ratio of Cash less
maintenance capex/STD is 1.0x. In Brazil, these ratios are even stronger at 2.3x
and 1.8x, respectively. Note: individual companies may have much stronger or
weaker ratios than the actual country ratios.
Liquidity in EMEA is generally weaker than in Latin America.
But government support is also greater. The average cash to short-term debt ratio
in EMEA was 0.8x vs. 1.8x for Latin America. Even after minimum capex, liquidity
in Latin America is still above 1.0x, while it is only 0.5x in EMEA. Russian banks
have US$10.4bn in bonds due in ‘09.
The Russian government has indicated that it believes 1,500 companies
would need government support, but that it could only support about 500.
In Dec-08, it unveiled a priority list of 295 companies in strategic sectors. Much of
this support will come from loans from state owned banks supported by the
government. The Finance Ministry has placed US$60bn in Sberbank, VTB and
Gazprombank, to help support the corporate sector. Additionally, VEB has a
US$50bn facility available for refinancing external debt. Total STD of the top bond
issuers in Russia was US$50bn as of 9/30th (vs. US$27bn for Brazilian corporates).
In Ukraine and Kazakhstan, the biggest concern is the banking sectors.
Kazakh banks are among the hardest hit, with around US$10.5bn in external debt
to be repaid within a year. In Ukraine, three banks have already been placed under
Central Bank control: (TOV Ukrprombank - the15th largest lender by assets),
Prominvestbank (6th largest by assets) and Nadra Bank (8th largest). Banks are
expected to suffer from severe problems the country will face in 2009 including
very tight liquidity, high short-term external debt with early repayment clauses, a
large share of past-due loans, etc.
Government support programs have been the backbone of support
In the case of both Brazil and Russia, funds made available for support range from
10-15% of GDP. In the case of Russia, this is primarily for refinancing purposes.
For Brazil, the funding is for refinancing and for capex programs to stimulate
economic growth in key sectors.

Table of Contents
Overview ............................................................................................ 3
2009 EM Bond Maturities .........................................................................................................4
2010 Bond Maturities................................................................................................................5
EM liquidity status vs. refinancing requirements ......................................................................6
Summary of government liquidity and support programs.........................................................7
Brazil ........................................................................................................................................8
Chile .........................................................................................................................................9
Kazakhstan ..............................................................................................................................10
Mexico ...................................................................................................................................11
Russia ....................................................................................................................................12
Ukraine...................................................................................................................................13
Summary of debt maturity profiles by country by year ...........................................................14
Argentina.......................................................................................... 15
Liquidity Analysis – Argentine corporates ...............................................................................16
Operating Performance: Argentine Corporates.......................................................................17
Brazil ................................................................................................. 20
Liquidity Analysis – Brazilian corporates .................................................................................22
Operating Performance: Brazilian Corporates .........................................................................23
Chile.................................................................................................. 26
Liquidity Analysis – Chilean corporates...................................................................................27
Mexico .............................................................................................. 31
Liquidity Analysis – Mexican corporates .................................................................................32
Operating Performance: Mexican Corporates.........................................................................33
Other Latam..................................................................................... 36
Liquidity Analysis – Other Latin American corporates.............................................................37
Operating Performance: Other Latin American corporates.....................................................38
Latin-American Banks ..................................................................... 40
Small and Medium Brazilian Banks ............................................... 41
EMEA Corporates ............................................................................ 42
Liquidity Analysis – Russia corporates ....................................................................................43
Operating Performance: Russian Corporates..........................................................................44