Foreign Investors Buy into Brazil, Lead M&A Activity

Brazilian companies are the cheapest they have been in years, presenting bargain hunters with prime buying opportunities.But foreign investors appear to be keener on the nation’s prospects than Brazilians, many of whom are spooked by the political turmoil that is worsening the nation’s economic slowdown.

Earlier this month, New York’s Coty Inc. agreed to pay $1 billion for the beauty-care unit of São Paulo-based Hypermarcas, expanding its presence in Latin America’s largest economy.

Through October, international investors such as Coty closed on 285 mergers and acquisitions in Brazil, up 5% from the first 10 months of 2014, according to data from PricewaterhouseCoopers. Brazilians, meanwhile, signed 275 deals this year, down 26% from the same period in 2014.

It is the first time since 2000 that foreigners have outpaced locals, according to Rogerio Gollo, partner and head of mergers and acquisitions in Brazil for Pricewaterhouse. “If you had asked me in January, I would not have told you this was coming,” he said.

What has turned the tide for many investors has been the weakening of the Brazilian currency by more than 30% to the dollar so far this year, which has helped foreign investors. In addition, the deepening of Brazil’s economic malaise—exacerbated by weakening political leadership—has hurt local companies.

Such cyclical booms and busts are common in emerging markets, and investors expect South America’s largest country by GDP to bounce back on the strength of its rising middle class and wealth of commodities. For those willing to endure some volatility, betting on Brazil now could pay off handsomely, said PwC’s Mr. Gollo.

“The buyer who is looking at Brazil with a horizon greater than three years is getting a good deal,” he said.

But the current picture is bleak. State involvement in key sectors and loose monetary policy unleashed during President Dilma Rousseff’s first term has left the government awash in debt and struggling to plug a massive budget hole. Reforms have taken a back seat as Brazil’s Congress focuses on the massive corruption scandal at state-run oil giant Petróleo Brasileiro SA, and impeachment efforts against the president.

“When you have a crisis of this magnitude, you need a vision…but the government does not have that,” said Ricardo Lacerda, founding partner and CEO of BR Partners, a boutique investment bank based in São Paulo.

As a result, business, consumer and investor confidence have collapsed. GDP growth is projected to contract by more than 3% this year. Urban unemployment recently hit a five-year high of 7.6%. Inflation is running at nearly 10%. Industrial production plunged nearly 11% in September from a year ago.

Among the hardest hit is Brazil’s auto industry. Vehicle sales through October totaled 2.15 million units, down 24% compared with the first 10 months of 2014. Thousands of auto workers have been laid off or furloughed. Some manufacturers who bet big on Brazil are putting on the brakes.

Chinese auto maker Chery Automobile Co., Ltd. is delaying a planned $300 million investment in its existing factory in the city of Jacareí, said Luis Curi, the company’s vice president in Brazil. Through October, Chery’s Brazil sales totaled 4,704 vehicles, down 38% from the first 10 months of 2014, according to the national auto-dealers association, Fenabrave.

Mr. Curi said the company has been hit by slumping demand and soaring prices for imported parts because of the weak real. “We’re living a perfect storm in Brazil,” he said.

In contrast, Honda Motor Co.’s Brazil sales have increased 15% to 125,061 vehicles so far this year, according to Fenabrave. But the Japanese auto maker, too, is retooling its investment plans amid concerns about the nation’s shaky economy and unpredictable politics.

The company said in late October it would delay the launch of a second Brazil vehicle-assembly plant that was slated to open in the first half of 2016. The new facility, which has been constructed in Itirapina in São Paulo state, will open “according to market developments,” Honda said in a statement. Paulo Takeuchi, director of institutional relations for Honda South America, said the auto maker remains confident about Brazil in the long-run, but is taking a cautious approach for now.

“What concerns us most is uncertainty, both political and economic,” Mr. Takeuchi said.

Brazil keen to further strengthen trade ties with India

Brazil today called for expanding a trade pact with India by adding more products such as frozen chicken (whole) and processed soyabean in the tariff agreement and also stressed on technology transfer and investment in agriculture research. Brazil is also keen to export ethanol and milk products to India and boost shipments of edible oils. 

India and MERCOSUR, comprising Brazil, Argentina, Uruguay and Paraguay, already has a preferential trade pact. 

“We would like to expand tariff agreement,” said Katia Abreu, the Brazilian Minister of Agriculture, Livestock and Food Supply. 

She said that existing agreement is “timid” in field of agriculture and there is a need to expand the base from the current about 450 products to 2,500 products. 

India-MERCOSUR preferential trade agreement (PTA) came into effect from June 1, 2009. The major sectors covered in the offer list under the PTA include meat, chemicals, leather goods, iron and steel products, machinery items and electrical machinery. 

India and Brazil have a bilateral trade of USD 11.36 billion. 

“We can bring frozen chicken (whole) to India. We face difficulty in chicken,” Abreu said at a FICCI conference. 

Speaking on the sidelines, the minister stressed on easing the rules for trade apart from improving the trade agreement. 

“We would like to expand our relations well beyond the area of just tariff. Most important is to improve and better rules,” Abreu said. 

Brazil has been emphasising with all the countries to harmonise and make rules easier, she said. 

On trade agreement, Abreu said: “We currently have about 450 products included in the tariff agreement. We would like to see this figure grow to 2,500″. 

She said that Brazil is interested in exporting ethanol and milk products, which have great demand in India and boost exports of edible oils as well. 

In dairy sector, Brazil wants to help India boost milk productivity. It is keen to bring to India the gene bank for milk-producing cattle as well as embryo and semen. 

Abreu spoke about enormous opportunities for collaboration between Indian and Brazilian agriculture sector through technology transfer and investment in research. 

She emphasised on the need to remove intermediaries and develop an independent commercial relationship between the two nations. 

“Either the two countries could allow the other international players to lead the trade for them or India and Brazil could remove the intermediaries and develop an independent commercial relationship,” Abreu said.

Europe’s Top Banks Are Cutting Losses Throughout Latin America

European banks are on the retreat all across Latin America.Societe Generale SA announced in February that it’s dismissing more than 1,000 workers while exiting the consumer-finance business in Brazil. In August, HSBC Holdings Plc sold its unprofitable Brazilian unit, with more than 20,000 employees. Two months later, it was Deutsche Bank AG’s turn. The German lender said it’s closing offices in Argentina, Mexico, Chile, Peru and Uruguay and moving Brazilian trading activities elsewhere. Barclays Plc is shrinking its operations in Brazil too.
The exodus threatens to deepen Latin America’s turmoil, making it harder for companies and consumers to obtain financing. The region already is out of favor as sinking commodity prices drive it toward the worst recession since the late 1990s. European banks, meanwhile, are looking to cull weak businesses as they struggle to generate profits and meet tougher capital requirements back home.
“All large European banks are under great pressure from regulatory changes and low stock prices to change their business models,” Roy Smith, a finance professor at New York University’s Stern School of Business, said in an e-mail. “These changes have to be quite significant to make enough difference.”

Spain, Switzerland

The exits are opening opportunities for local rivals and global banks from the U.S., Spain and Switzerland willing to wait out the economic slump.
Latin America’s economy will probably contract 0.5 percent this year, squeezed by falling commodity prices and a slowdown in Brazil that’s predicted to be the longest since the Great Depression, estimates compiled by Bloomberg show. That would make it the first recession in the region since 2009 and the biggest since 1999. Demand for investment-banking services is tumbling, with fees plunging 45 percent this year through Oct. 15 to a 10-year low of $817 million, Dealogic said.
“European banks have fairly weak profits right now and in some cases low capital levels,” Erin Davis, an analyst from Morningstar Inc., said in an e-mail. That leaves “little wiggle room” to absorb losses or low profits from Latin America, even if they believe in its long-term potential, Davis said.
Deutsche Bank, which started operating in Latin America in 1887 with a unit in Argentina, has about 269 jobs in the five countries it’s leaving, according to its 2014 financial statements. In Brazil, it has about 334 employees.
“The region is attracting fewer investments, and that reduces the need for investment banking,” Ricardo Mollo, a professor at Insper business school in Sao Paulo. At the same time, demand for loans is waning and late payments are rising.
Brazil, Latin America’s biggest economy, is also the place cuts pay off the most for some European banks. In addition to Societe Generale dropping its consumer-finance unit there, HSBC sold its Brazilian subsidiary to Banco Bradesco SA in a $5.2 billion deal announced in August. Barclays, which had about 150 people in 2013 in Brazil, has reduced the team to 80, people familiar with the matter said.
Societe Generale “remains committed to Brazil and will continue to serve its institutional and corporate clients through its local entities,” the bank said in a statement. Barclays declined to comment.

As for HSBC, Chief Executive Officer Stuart Gulliver has said the pullback was needed as part of a plan to reduce expenses by as much as $5 billion by 2017. Elsewhere in Latin America, Gulliver said in June in an interview with Mexican newspaper Reforma that HSBC would stay in Mexico, after previously saying the country was one of four potential markets the bank would leave.

HSBC Scrutiny

Complicating HSBC’s decisions about the region are money-laundering and tax-evasion scandals linked to Swiss accounts in Brazil. It’s also been under scrutiny in the U.S. since 2012 after it reached a $1.9 billion deferred-prosecution deal to resolve claims it helped Latin American drug cartels launder money.
Global banks with sizable Latin American subsidiaries that operate trading and investment-banking businesses could pick up some of the business European banks are leaving behind, Fitch said in a report, singling out Citigroup Inc., Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, JPMorgan Chase & Co. and Bank of America Corp. Local players in the region, such as Itau Unibanco Holding SA and BTG Pactual Group, might also benefit, Fitch said.
JPMorgan says it doesn’t plan to make changes to its team in the region, while Bank of America, which has about 1,000 employees in Latin America, added 150 people this year. Citigroup sold its consumer and commercial units in Peru, Costa Rica, Panama, Nicaragua and Guatemala, and is maintaining its corporate and investment-banking businesses.

U.S. Improvement

“The U.S. economy is doing better, so it’s normal that U.S. banks are also doing better and being more aggressive in taking risks in Latin America,” Mollo at Insper said.
Argentina is the country where perceptions are shifting the most, 10 days before a presidential election where the two main candidates have promised change from a dozen years of populism led by the Kirchner family. Hedge funds and other investors say the departure of President Cristina Fernandez de Kirchner could bring a more market-friendly government and a profit windfall.
Many Swiss firms are still bullish on the region as well. Julius Baer Group Ltd., the third-largest wealth manager in Switzerland, announced in July it would acquire a stake in Mexican firm NSC Asesores after boosting its interest in GPS Investimentos Financeiros e Participacoes SA to 80 percent in Brazil last year. Credit Suisse Group AG is keeping its team in Latin America, and its Brazilian unit hired 15 people this year for private banking. UBS AG, the biggest wealth manager in the world, is also hiring in the region. Chinese banks including China Construction Bank Corp. and Bank of Communications Co. are buying local lenders and increasing their presence.

Santander’s Confidence

And Spain’s Banco Santander, which withstood Brazil’s 1999 currency devaluation and financial crisis in 2002, remains confident about the country’s prospects. Chairman Ana Botin said in September that reforms under way could mean a return to growth as soon as next year.
For many of her competitors, time has run out for that kind of optimism.
“Going back a few years, global banks were trying to offer all products to all people in all locations, said Richard Barnes, an analyst at Standard & Poor’s in London. “With tightened regulatory requirements, you just can’t really do that anymore.”

Shares Drop As Commodity Saga Continues, Finance Minister Out?

Some headlines from Brazil, with the iShares MSCI Brazil Capped exchange-traded fund (EWZ) down 2.4%
Local press reports in Brazil Wednesday said Brazil’s Finance Minister Joaquim Levy could be replaced within months as the economy and currency collapse. Brazil President Dilma Rousseff may choose Henrique Meirelles, a former central bank president.
Brazil’s government says it will fine mining companies BHP Billiton (BHP) and Vale (VALE) for a disastrous mine dam collapse. BHP shares are down 2.4% this morning while Vale shares are down 1.5%. “The government is increasingly concerned over the rising death toll and contaminated mud flowing through two states as a result of the disaster,” Reuters reports in the story, “Brazil vows to make BHP, Vale pay for deadly mine disaster.”

Oil Workers Strike in Brazil for Wages, Investments, Assets

Twelve oil work unions which are part of the Oil Workers Federation (FUP) in Brazil began on November 1st, a strike at Petrobras refineries all over the country. According to union officials, strikers are protesting against Petrobras’ asset sales, investment cuts, project suspensions, and reduction of some workers’ rights.
“The strike was agreed upon more than 45 days ago. We did try negotiating with Petrobras and the major shareholder, i.e. the federal government, before stopping working, but our demands were not met,” said Simão Zanardi Filho, of the Union of Oil Workers of Duque de Caxias, Rio de Janeiro state, and FUP director in an interview to Agencia Brasil.

In a statement, Brazil’s oil giant says the company is willing to sit down at the negotiations table and discuss pay raises with union leaders. According to company officials Petrobras has offered an 8.11 percent pay raise, while workers want 18 percent.

In addition to the pay increase, unions are against the sale of assets and the reduction in investments announced by the company. According to the Federation of Oil Workers ‘cuts in investments, sales of assets, interruption of construction and halt in projects impact the country’s development and national sovereignty.

Last month Petrobras’ Council approved the sale of 49 percent of the stocks of subsidiary Gaspetro to Mitsui Gas and Energy Brasil for R$1.9 billion. The sale is part of Petrobras’ corporate plan, announced in the first semester of this year, to improve the company’s financial situation. In August the state-owned oil company authorized the sale of 25 percent of stock from another subsidiary, BR Distribuidora.

In addition to the sale of some of its assets, Petrobras also announced this year it was reducing investments from US$37.1 billion in 2014 to US$25 billion in 2015.

Brazil Says Any Oi-TIM Deal Would Be Studied Closely

The Brazilian government would study any potential merger or acquisition agreement between telephone companies Oi SA and TIM Participações SA closely to avoid too much concentration in the sector, Communications Minister André Figueiredo said Tuesday.Oi announced Monday that LetterOne, an investment firm led by Russian billionaire Mikhail Fridman, is planning to invest $4 billion in the Brazilian phone company. The offer is conditioned on the success of a potential merger with TIM Participações SA, the Brazilian unit of Telecom Italia SpA, Oi said. TIM Participações said Monday that there are no talks with LetterOne or Oi about a possible merger or acquisition.

“The Brazilian government will follow with attention the case announced by Oi about TIM,” Mr. Figueiredo said at a conference. “We’ll only comment when we’ve been formally informed by the company.”

Oi has 35% of Brazil’s fixed-line telephone market, but it fell behind rivals in the mobile race and has been trying to make up ground while cutting its heavy debt load. Mobile operator TIM doesn’t have a relevant position in the fixed-phone and broadband markets, according to analysts.

Later, at the same conference, Telecom Italia Chief Executive Officer Marco Patuano said a combination of TIM Participações with Oi would be “one of the options,” but added that all the telecom companies in Brazil are in need of more investment.

In the second quarter, the most-recent figure available, Oi’s net debt totaled 34.64 billion reais (about $8.9 billion), while its net revenue in the period totaled 6.78 billion reais.

When asked about Oi’s debt level, Mr. Figueiredo said the government might help the company if necessary.

“Nothing has been ruled out,” he said. “We know how important Oi is, though that doesn’t necessarily mean the government will inject cash directly into the company.”

Meanwhile, Oi said that it is working to improve its performance.

“We are engaged in the improvement of our balance sheet and in the improvement of our debt profile, in order to prepare the company to participate in the consolidation process of the telecom industry in Brazil,” said Oi CEO Bayard Gontijo to The Wall Street Journal, before his participation in an event in São Paulo.

Shares of Oi and TIM Participações fell mid-Tuesday, after being the Ibovespa stocks index’s biggest and second-biggest gainers, respectively, on Monday. Oi recently was down 3.7%, to 3.37 reais, and TIM Participações was down 8.2%, to 7.87 reais. The Ibovespa was down 0.7%.

New investments signal turnaround in Brazil ethanol industry

Improved returns from sales at home and abroad are unleashing the first major flurry of investment in Brazil’s struggling ethanol industry in nearly a decade, with at least nine companies expanding or building new capacity.

Medium-sized private mill Rio Verde said it would double ethanol output over the next two years to capture resurgent biofuel demand.

Cargill and Odebrecht are the biggest of at least eight other companies investing in expansion in the past months, even as Latin America’s largest economy sinks deeper into its worst recession in over a decade.

The real’s collapse has improved Brazilian ethanol’s edge abroad, and recent increases in refinery-gate prices by state-run oil company Petrobras and taxes on gasoline have boosted domestic demand for the biofuel to record levels.

Once completed, Rio Verde’s expanded output will account for only a small portion of Brazil’s total capacity, but this and the other projects are the strongest sign yet that ethanol has turned a corner after government subsidies of gasoline prices could no longer be sustained. 

“The outlook for ethanol has brightened, even as the broader economy looks more difficult,” said Luis Galan, operations manager at the Rio Verde mill in Goias state.

Earlier this year, Rio Verde started commissioning its new ethanol unit, which will produce 180,000 liters (47,500 gallons) a day, in addition to its current 300,000 ltr/d output. Another 190,000 ltr/d will come in the second phase in 2016 or 2017.

The total 670,000 ltr/d comes to 0.5 percent of Brazil’s capacity of 115 million ltr/d.

To be sure, many of Brazil’s 360 mills are in no position to start building new plants as they struggle with stifling debt accumulated over the past decade. Many are still skeptical that the government has abandoned its practice of suppressing fuel prices to curb inflation, which helped drive nearly 80 mills out of business in the past several years.

But the government is quickly running out of ways to replace falling revenues in the deepening economic downturn. This makes additional tax increases on gasoline more likely, which would further strengthen ethanol’s advantage at the pump.

“The sector is finally turning around,” said Alexandre Figliolino, head of agribusiness at investment bank Itau BBA.

Mikhail Fridman Proposes $4 Billion Investment in Oi of Brazil

The Russian oligarch Mikhail Fridman may spend as much as $4 billion to expand his telecommunication holdings into South America.On Monday, the Brazilian telecommunications company Oi said that Mr. Fridman’s investment group, LetterOne, had given it a proposal to invest in a possible merger of Oi with Telecom Italia’s local operator, TIM Participações.

“In accordance with LetterOne’s proposal, sent by BTG Pactual to Oi’s management and board, LetterOne would be willing to invest as much as $4 billion in Oi, conditioned on the operation of consolidation (with TIM),” Oi said in a statement. The company said that it would “analyze” the offer.

Because Oi’s market value is about $650 million, Mr. Fridman’s investment would presumably give him control of Oi’s stake in any merged company, but Oi’s statement also said that any deal “would not represent an economic dilution of shareholders.”

Mr. Fridman became one of the world’s richest men after selling his stake in joint oil venture TNK-BP to Rosneft in 2013 . He also recently sold energy assets in Britain.

Through LetterOne Mr. Fridman already own stakes in two telecom companies: VimpelCom, based in Amsterdam, and Turkcell in Turkey. LetterOne said in April that it was planning to spend up to $16 billion on telecom acquisitions.

Oi hired the Brazilian investment bank BTG Pactual last year to look for a way to merge with TIM Participações. At the time, BTG stitched together a $14 billion deal in which Oi would have joined forces with Telefónica of Spain and América Móvil of Mexico to carve up TIM Participações, but the deal fell through as Telecom Italia decided to maintain its presence in Brazil.

Since then, Brazil’s economy and TIM Participações’ business model have deteriorated.

The company’s revenue is falling, its cash flow is negative, and it has lost about a third of its value on the São Paulo stock exchange over the last year.

For Oi, Mr. Fridman’s cash might be a way out of a mountain of debt.

The company, saddled with a merger with Portugal Telecom, has $13 billion in gross debt and this year had to request a waiver on loan covenants with its banks.

But it is far from certain that Mr. Fridman’s offer will indeed lead to a merger.

Jonathan Dann, telecommunications analyst with RBC Capital Markets in London, said that even though a merger between Oi and TIM Participações would have an “industry logic,” it was not clear how a deal could simultaneously reduce Oi’s debt, keep Oi’s shareholders from suffering dilution and meet Telecom Italia’s likely need for either a large cash payment or control of the new company.

“This will be a very challenging deal to structure,” Mr. Dann said.

In statement, TIM Participações said that no negotiations were currently underway with either Oi or LetterOne about a possible merger.

Foreign investment in Brazil grows in September, covers external gap

Brazil’s current account deficit grew wider than expected in September but was easily covered by foreign investments, central bank data showed on Friday. 

Brazil posted a current account deficit of $3.076 billion in September, larger than a gap of $2.487 billion in August and the $2.3 billion deficit forecast by economists for the month, central bank data showed on Friday. 

Brazil attracted $6.037 billion in foreign direct investments last month, up from $5.246 billion in August, the central bank said. 

Despite the monthly increase, the current account deficit declined as a percentage of Brazil’s gross domestic product in the 12 months through September. It was equivalent to 4.18 percent of GDP, down from 4.34 percent in the previous month. 

A weaker Brazilian real is helping exporters and curbing imports, boosting the country’s trade balance after the country recorded its first deficit in 14 years in 2014. 

Brazil’s currency dropped more than 30 percent this year to a record low of more than 4 per dollar as investors fret over a steep rise of the country’s debt. 

Brazil Bull Who Got It Right in 2002 Says This Time No Different

The selloff punishing Brazilian markets in recent months isn’t fazing Jerome Booth. He’s seen it before and says just like then, it’s way overdone.Yes, Brazil has serious problems. The country’s “a mess,” he says, with a massive corruption investigation at state-run oil company Petroleo Brasileiro SA, a worsening fiscal outlook, the steepest recession in 25 years and a political system so fractured that needed reforms just aren’t getting done. That’s not to mention a credit-rating cut to junk and the currency’s plummet to a record low.

But there’s no chance the government is going to default, and politicians eventually will find the will to push through measures to shore up the budget and restore growth, Booth said in an interview in New York. The panic among investors is excessive, just like 13 years ago when bond prices collapsed along with the currency amid concern the front-runner in presidential elections would repudiate the government’s debt, said Booth. He was then head of research for Ashmore Investment Management, at the time one of the biggest dedicated emerging-market sovereign bond holders.

“You’ve got the classic ‘everything’s as bad as it can possibly be’” situation, said Booth, the chairman of New Sparta Asset Management, an investment company he started after leaving Ashmore in 2013. “But it’s all priced in now.”

Brazil’s overseas bonds are close to reaching bottom, according to Booth, after losing investors 8.3 percent this year. Only Zambia has posted worse returns among more than 60 emerging-market countries tracked by JPMorgan Chase & Co. indexes. Brazil’s currency, which gained 0.7 percent Monday as of 2:03 p.m. in New York, is still down 32 percent against the dollar this year, the most among major emerging markets.

After three sovereign rating cuts in the past three months, one of which cost Brazil its investment-grade rating, the government will put a “proper economic program” in place and restore investor confidence, Booth said.

“I would think it’s months rather than a year,” he predicted.

What makes Booth confident even as shops from BlackRock Inc. to Federated Investors Inc. and RBC Capital Markets see reasons to avoid Brazil?

Because he thinks most investors have overestimated the risk, just like in 2002. Back then, a selloff hit ahead of the presidential election as Luiz Inacio Lula da Silva gained in the polls. The concern was that the former union leader and founder of the Workers’ Party would declare Brazil’s debt illegitimate. Observers worried the country was slipping backward just a decade after shaking off a legacy of hyperinflation and political instability to become one of the world’s brightest stars among developing nations.

The real plunged to a record low, average yields on the country’s bonds soared to more than 25 percent and the benchmark stock gauge tumbled 40 percent ahead of the vote.

“The hedge funds at that point had this view that there’s a thing called a self-fulfilling prophecy,” Booth said. “They knew one thing: If all their peers in New York were negative,” then Brazil “would fall over. I thought that was just nonsense.”

In fact, when Lula won, investors were rewarded. From his inauguration at the start of 2003 until he left office at the end of 2010, Brazil’s dollar-denominated bonds returned 256 percent, more than double the emerging-market average. Real-denominated notes advanced 520 percent in dollar terms, almost three times the average for peers. The currency more than doubled in value against the dollar, and stocks surged 500 percent.

While Booth had money at stake when he made his call in 2002, this time around he’s not investing in Brazil’s markets. After leaving Ashmore in May 2013, he established London-based New Sparta, through which he manages investments in U.K. phone company New Call Telecom and a magazine publisher, among other businesses. New Sparta funded the Drew Barrymore comedy “Miss You Already,” which premiered at the Toronto International Film Festival last month.

Still, from his vantage point, Booth says investors are too worried about developing countries. Emerging-market assets have dropped for most of this year amid concerns the Federal Reserve will raise rates and as the Chinese economy shows signs of deceleration.

“1998 was the last time when you had a systemic crisis which could have led to serial defaults over emerging markets,” Booth said. “We haven’t had that, and we’re not likely to have that again.”

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