Research & Strategy

Our Research & Strategy department focuses on innovative, market oriented views and analysis for institutional clients in the fixed income market.

We emphasize our local presence in the region to provide value added in markets like Venezuela and Argentina, where information is not ready accessible. Our main goal is to give investors decision-making tools based on fundamental and quantitative research.

Venezuela Weekly Report

Shakeups are the Order of the Day

December 8, 2017BancTrust & Co. Research Team
  • The naming of the new president of CITGO was the start of a series of moves in the national oil industry and the Executive branch trying to fight corruption, ending (so far) with the detentions of former heads of PDVSA and Oil Ministers Eulogio Del Pino and Nelson Martinez
  • New Oil Minister Manuel Quevedo had a quick international debut by participating in the OPEC meeting where the output cut agreement was extended for 9 more months
  • We address ISDA’s announcement on CDS auctions for VENZ and PDVSA bonds. Meanwhile, Clearstream said that they received the cash for the PDV’27 payment but that it will be retained until solving an inquiry on the “irregular manner” it was done

We have had a couple of busy weeks after President Nicolas Maduro ordered a revamp of the oil industry to fight corruption. First, the President decided to name Asdrubal Chavez as the new head of CITGO after Jose Pereira, the company’s acting president (at the time), and other 5 vice-presidents were detained – for more details, check our 24 November Weekly Report PDVSA’s Calling Out its Peers. Nonetheless, one of the most important announcements was the one of Major General Manuel Quevedo as Oil Minister and President of PDVSA.

At first glance, Quevedo’s move might be considered as negative due to several reasons, starting from the fact that he does not have experience in the industry and is replacing two characters with much more experience in the oil sector – Eulogio Del Pino and Nelson Martinez. Furthermore, it remains to be seen the impact of his naming in the debt renegotiation process but creditors might see with less confidence that key positions for the country’s economy are being held by a less market-friendly individual.

In spite of all this, we still believe that the ideology that Manuel Quevedo will follow through his stint will be the one that President Nicolas Maduro and the rest of the Executive branch have preached so far, thus he is unlikely to bring a turnaround to this general view. In this respect, the fact that one of his first statements was that PDVSA has the capability to honor its financial obligations serves as one example of this. Therefore, we don’t see debt restructuring negotiations being affected significantly as a consequence of his naming.

From our standpoint, Quevedo, the former Housing Minister, will instead serve the main roles of commanding a cleansing of PDVSA – after the myriad of arrests and investigations of different corruption schemes – and reinforcing political support towards President Nicolas Maduro. In the meantime, Quevedo’s move provoked also a cabinet reshuffle, with his former position now being occupied by General Ildemaro Villarroel while former governor – and head of the tax authority – Jose Vielma Mora will take charge of the Foreign Trade and Investments Ministry.

Argentina Weekly Report

Forecasts 2018: Will Gradualism Continue?

January 5, 2018BancTrust & Co. Research Team
  • We expect 2017 GDP to coincide with the government’s target of 3% by year end, while for 2018 we expect growth to be around 3.5%
  • As it was previously anticipated, the inflation target will not be accomplished and we think it could end around 23% – 2% above our last year estimation. Meanwhile, we expect it to continue its decreasing trend for 2018, and end the year at a range of 15% to 19%
  • 2018 will be a year to take a closer look into the BCRA decision regarding its key monetary policy rate, as foreign exchange lags are turning into a significant issue to look for
  • However, recent announcements on the adjustments of 2018 inflationary goals set a more realistic scenario from the government’s side. Likewise, this announcement quickly affected the FX market which depreciated above the ARS/USD19 level
  • We see with good eyes the path on fiscal deficit reduction. Thus, we do believe the government could accomplish its 4.2% target for 2017 and 3.2% for 2018

This year represented a challenge for Macri’s administration as it was not only the year to start implementing its reforms, but also to prove that it counted with the political backup to implement them. In this regard, mid-term elections meant a victory to Macri’s image as his party demonstrated to have the strength to surpass former president Cristina Fernandez de Kirchner’s intentions, and it also meant that the path to approve the needed reforms was, at least, easier. However, the elephant in the room for the government is the continuous criticism about the level of gradualism, after a difficult 2016 that did not seem to improve, and the biggest fear for 2018 is that planned reforms won’t be enough to overcome it. Nevertheless, there is good news to highlight.

Dominican Republic Bi-Weekly Report

Forecast 2018: The Bump of 2017 Might Be Just That

January 5, 2018BancTrust & Co. Research Team
  • DR saw lower growth rates in 2017, due to larger-than-expected cuts in public spending and the downfall in construction. However, we see 2018 as the year for the return of DR to the lead amongst the top performing economies
  • Tourism continues supporting GDP growth and it maintains its position as one of the most important hard currency sources for the country
  • We expect External Current Account to end at -1.8% of GDP this year, while better income and higher oil prices make it likely to repeat the figure in 2018
  • Inflation will end the year close to the goal of around 3.8%, while for 2018 we like BCRD’s goal of 4% – barring any abnormal spikes in oil prices
  • In the political arena, the negotiations regarding an Electrical Pact suffered enormous delays, while the Electoral and Political Parties laws are still pending. 2018 should see the approval of at least one of these

The Dominican Republic decelerated its economic growth but the total result is likely to remain a positive one and be only a bump in the high-growth road; then, next year we could be seeing again region-leading figures – although risk factors are important and could weigh heavily. Unprecedented delays on the report of official figures coming from the Central Bank (BCRD in Spanish) have made much more difficult assessing the economic performance – economic activity indicators are available as of August –, but our local color leads us to expect growth rates exceeding 5% y-o-y, translating into an improved performance through 2H17 after 1H17 showed a 4% y-o-y rate – consequence of 2Q17’s underperforming 2.9%. It is worth mentioning that we made this forecast without taking into account a (still unavailable) figure on the impact of the hurricane season in DR’s GDP.

Andean, Central America, & Caribbean Weekly Report

Bolivia & Jamaica

December 22, 2017BancTrust & Co. Research Team

Bolivia: Struggling to achieve a fourth presidential term

  • President Evo Morales announced his candidacy for 2019, after the Constitutional Court allowed indefinite re-election
  • Government sent to the Legislature the 2018 Budget proposal, with an estimate of 8.3% of fiscal deficit and a projected economic growth of 4.7%

The political tensions increased after the last week of November, when the country’s Constitutional Court decided to authorize indefinite re-election for public office, which would allow current President Evo Morales to run for presidential elections scheduled for 2019 – if won, it would mean his fourth consecutive presidential term. Moreover, the verdict would also allow other candidates for public office such as state governors, senators, parliamentarians and mayors to run indefinitely.

Ecuador Bi-Weekly Report

Preparing the Ground for Broader Economic Measures in 2018

December 15, 2017BancTrust & Co. Research Team
  • In the absence of a response from the Constitutional Court, the President convoked the popular consultation and referendum to the CNE
  • The National Assembly approved the Budget for 2018 proposed by the Executive branch with no changes
  • The government is carrying out projects to boost the shrimp sector as well as infrastructure and public services

As we mentioned in our last Ecuador bi-weekly report, the growing pressure on the referendum, as a consequence of the different demonstrations in favor of the consultative process, generated the necessary support for President Lenin Moreno to convoke, through two executive decrees, the popular consultation and referendum to the National Electoral Council –CNE in Spanish. The first one refers to the fight against corruption, indefinite reelection, among others and the other one is related to environmental issues and the repeal of the capital gain law.

Corporate Weeky Report

Corporate Report: Pampa Energia

October 7, 2016BancTrust & Co. Research Team
  • Last July, Pampa Energia finished the acquisition process for Petrobras Argentina S.A, turning it into the largest private energy company in Argentina
  • Currently away from top positions, Pampa is likely to improve in its market share position for both oil and gas by next year, once the merge with Petrobras is totally complete
  • An upcoming issuance, which is set to repay a bridge loan which permitted the acquisition of Petrobras, is expected to be of USD600mn, which would be the largest issuance of the company

Company Background

Pampa Energia S.A. is one of the principal energy companies in Argentina and through its subsidiaries manages to participate in all stages of the electricity activity, from exploration and production to distribution. Its activities are separated over three different segments: generation, transmission and distribution. Moreover, the company has participation in production and distribution of general gas. Just to set an example, through Edenor in the distribution segment, Pampa has an important participation in the Argentine market with an estimate 21% of participation in the whole supply of electricity.

  • Tuesday, January 16 2018


    - Yesterday the President Nicolas Maduro gave its yearly speech which should be something close to the state of the union and that according to the constitution should be presented in front of the National Assembly. However, this year and arguing the illegality of the National Assembly, the decision was to give his speech in front of the National Constituent Assembly. In detail, more than a state of the union this was one of the usual speech of the President with not much data to collect. Among

  • Monday, January 15 2018


    - The dialogue meeting held in the Dominican Republic between members of the opposition and the government last weekend culminated again without any results. International mediators indicated that although some agreements were reached, several points remain pending and both parties will meet again this Thursday, January 18. In our opinion, it was expected that results would not be achieved,as we have been saying we believe that the most likely to happen is that the negotiation rounds will culmin

  • Friday, January 12 2018


    - The National Electoral Council (CNE in Spanish) announced that it has approved the schedule for the validation of political parties that did not participate in the last municipal elections which it will take place on 27 and 28 of January. The process will be carried out to comply with the order of the National Constituent Assembly (ANC), which has as its sole purpose to be another obstacle for the opposition. We believe that at the moment the attention is focused on the negotiations in the Dom

  • Thursday, January 11 2018


    - The situation regarding Venezuela’s debt with Brazil received yesterday two mixed updates, as the Brazilian Ministry of Finance reported that the first paid an old debt but that it is still in arrears with another payment. In detail, the ministry informed that Venezuela paid USD262.5mn – corresponding to the May-August period of 2017 – on 5 January as part of their commitments under the Reciprocal Credit and Payments Agreement (CCR), which is part of the benefits of the Latin American In


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