Banco Puente ‘very optimistic’ about Argentina’s investment opportunities

Despite its sovereign debt, Argentina is among the 20 largest economies in the world and offers not only a good platform to do business for the rest of Latin America, but has an abundance of interesting investment opportunities

November 17, 2014

Banco Puente, which is based mainly in Argentina, is one of the leading investment banks in Latin America. World Finance speaks to its Capital Markets Director, Marcos Wentze, about how the investment banking industry has remained strong, despite the country defaulting for the second time in a decade on its sovereign debt repayments.

World Finance: Marcos, you operate throughout Latin America, but are primarily based in Argentina. Earlier this year the country defaulted for the second time in a decade on its sovereign debt repayments; how has this felt in the Argentinian investment banking industry?
Marcos Wentzel: I would say it’s totally different, what happened in the last default. It’s more a legal problem. At the end, what happened is that some kind of the debt that Argentina had put it in a situation of default.

What’s happened in the market, we see it mainly as a stop from outside investment, outside inflow, and what we still see is a lot of interest of all investors around the world in Argentina; a very good medium and long-term picture. But we must struggle through the next couple of months until this situation comes through.

World Finance: Now how has this posed opportunities or challenges for Banco Puente?
Marcos Wentzel: Well yes, it’s always for us a challenge, because the economy here has given us constant challenges!

We are very optimistic. We are going to have a couple of months more volatility, but with a good future view

On the wealth management side, we see a lot of clients looking for more conservative investments. They don’t only go to Argentina, they go to corporate investments. So, looking for good yields and better credits in this situation.

What’s going on in the rest of the LatAm region is, the economies are getting slower; Argentina’s getting slower. But at the end we see a lot of potential for Argentina.

I think the expectation of everybody to investments here is very high. As you probably know, next year we’re going to have elections – there is no possibility for this government to continue. And we see at this point different alternatives, different candidates, and they’re all very open to international investment for different projects, infrastructure projects the country has.

We are very optimistic. We are going to have a couple of months more volatility, but with a good future view.

World Finance: So for the next 12 months, would you say there are investment opportunities in Argentina? And then as you said, in the longer-term when the new government arrives, which sectors would you target for growth?
Marcos Wentzel: After 12 months, for sure energy. The energy sector is one of the sectors that has been in need of investment, and the growth of Argentina over the last 10 years has been on average six percent. And from being an exporter of gas 10 years ago, we are importing gas at this point. So Argentina has the reserves; what is needed is the funding and investment to have this gas in the local market, and put Argentina again in an exporting situation.

So energy, for me, is one of the places that for sure is going to be an ace today, in the view of international investors. Not for the short-term, because for sure you will have this volatility because of what’s going to happen mainly in the political environment.

[E]nergy, for me, is one of the places that for sure is going to be an ace today, in the view of international investors.

World Finance: So is there anything you’d like the new Argentinian government to do, to help attract new investors to the country?
Marcos Wentzel: The issue that the last government had was that Argentina today’s debt over GDP is one of the lowest in the region. So I think that’s something very positive for the next government. It will give them the opportunity to go on the capital markets internationally.

What’s going to be really important for me and for all investors, is that the target of these funds really goes to investments that will support the continuous growth of Argentina for the next 10 years. And that’s the main challenge this government will have.

World Finance: Let’s talk about Banco Puente in the context of this volatility, then. How do you manage your investment risk?
Marcos Wentzel: Well, as the main investment bank in Argentina, we diversify our risk through different locations. We cover the southern cone from Argentina, but we have offices in Uruguay and in Paraguay, where we do not only get the flow of investment coming to Argentina, or from Argentina going to these countries; we’re also involved in local businesses.

For the other side, we are in Peru, where we cover all the Andean corridor. And we are also in investments in Peru, Colombia and Chile, from our office in Peru.

And we cover all the central Caribbean from our offices in Panama. So our diversification goes not only in the kinds of business; it goes also in the countries we’re in, so that 100 percent of our income is not only from Argentina.

World Finance: So what’s the outlook for the Latin America region?
Marcos Wentzel: I would say on the whole, the main challenge for emerging markets, the Latin American countries, they will mainly have an infrastructure growth challenge to continuously grow their GDP for the next couple of years.

Commodities will not always be as high, will give the economies a backwind situation so that economies will grow. So it’s really important for all economies that they really start investing so that their infrastructure projects can be developed. And the real challenge is to get this funding and projects going on. And that’s the point today that everybody’s focusing on.

World Finance: A very hopeful outlook. Marcos Wentzel from Banco Puente, thank you so much for your time.
Marcos Wentzel: Thank you very much.