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

Putting the Petro in Front of the Economic Battle

January 19, 2018BancTrust & Co. Research Team
  • 2018 started out carrying with all the economic problems from 2017 in an exacerbated way, and the government’s response is the launching of the Petro
  • After EMTA’s recommendation on the VENZ bonds we saw signs of recovery in the market, and the gap between PdVSA and VENZ was reduced by more than 40% according to our proprietary indices
  • There is no clear panorama on the political arena, but results from the negotiations between the government and the opposition are being widely demanded

After a rough 2017 in economic and social terms, 2018 seems to be continuing in the same direction with the first days of the year presenting numerous difficulties in the performance of the economy, with inflation continuing in its skyrocketing trend and with an exacerbated shortage of food that has turned into some events of local protests and lootings, especially in small cities in the countryside. On the other hand, the government’s response is focused on a proposal to battle all the financial and economic inconvenience the country has been suffering lately: the “Petro” cryptocurrency.

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

Forecasts 2018: Political Tensions Hinder the Way

January 5, 2018BancTrust & Co. Research Team
  • We expect that by 2018 the official growth target of 2% will be achieved, driven by higher exports, new mining projects and oil negotiations
  • Deflation will be the main threat to the economic recovery as domestic demand shows no signs of improvement; we expect inflation rate around 0.5% for 2018, below official goals
  • As long as political tensions remain, we do not expect fiscal measures to generate a significant impact, making it necessary to appeal to external financing
  • In our opinion, Ecuadorian exports could increase 14% in 2018 due to new trade agreements with Brazil and Puerto Rico
  • We believe that mining and oil will generate good results in 2018 as a consequence of new concessions and an agreement with Asian firms

2017 was an election year for Ecuador, so economic policy was highly related to political issues and the absence of deep measures to reactivate the economy predominated. However, the Ecuadorian economy overcame recession this year, according to data from the Central Bank of Ecuador with growth rates in the first two quarters of the year of 2.2% and 3.3% y-o-y respectively. Nonetheless, the improvement in economic activity was mainly driven by an increase in current spending and imports by the government, characteristics of an election period. This strategy clearly generated short-term results and did not reactivate the economy for the long term as it can be seen in the update of the Central Bank’s growth target made last week from 0.7% to 1.5%, which would mean that after the performance shown in 1H17, the economy should only grow 0.1% in the second semester to reach this goal.

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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Our Research and Analysis Reports are not directed at or intended for use by any person resident or located in any jurisdiction where (1) the distribution of such information or functionality is contrary to the laws of such jurisdiction or (2) such distribution is prohibited without obtaining the necessary licenses or authorizations by the relevant branch, subsidiary or affiliate office of BancTrust & Co. and such licenses or authorizations have not been obtained.