citi corporate trust services for multilaterals in latin america
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Corporate Trust Services for Multilateral Agencies in Latin America
Citibank Agency and Trust
Agenda
Opening Remarks
Rafael Cardenas
Citi’s partnerships with Multilateral Agencies
Alan Smith
Panel Discussion: Corporate Trust Services for Multilateral Agencies in Latin America
Ernesto Sarria Profile of the Trustee in Panama Use of ‘CKDES’ for Infrastructure Projects in Mexico Business Sectors Driving Growth in Argentina Mandatory Legal Reserve for Local Currency Deposits of Foreign Financial Institutions in Peru Tax on FX for Non-Residents - IOF in Brazil Foreign Exchange Regulations that apply to Offshore Accounts Opened by Fideicomisos (Trusts) in Colombia Cross Border Capabilities
Rafael Cardenas Issuer Services Business Head for Latam
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Citi’s partnerships with Multilateral Agencies
Alan Smith
Global Head of Issuer Services
Executive Summary
Citi is a partner of choice for Agencies and clients – Citi has a strong global presence across Asia, Latin America, Europe, North America,
Africa and the Middle East – Our integrated corporate banking, capital markets, and transaction services capabilities
provide our clients and Agency partners with consistent solutions globally
Continued need for Agency support in Latin American market – Even as financial markets improve, Latin American companies are still looking to
Agencies to support their large scale capex and working capital needs – There are numerous opportunities for investment in oil & gas, power,
telecommunications, financial institutions, mining and infrastructure sectors
Collaboration opportunities between Official agencies and Citi – Citi continues to work with Official Agencies to financings across Latin America for both
corporates, public sector clients and financial institutions – Citi maintains a rich pipeline of infrastructure, energy and mining projects across the
region that could benefit from Agency support
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Agency Partnerships
Global presence across over 100 countries
Unparalleled agency financing expertise developed through long relationships with over 60 agencies globally
Leadership in the arrangement of multisource financing with ECAs, MLAs and DFIs
Broad industry experience:
Citi’s global franchise and agency finance expertise enables Official Agencies to reach an unmatched client base worldwide, with a consistent working partnership approach
Collaboration with Citi:
Its long and deep presence in Latin America makes Citi an ideal partner for Official Agencies
Official Agencies can leverage Citi’s relationships with corporates, public sector clients and financial institutions in Latin America to facilitate business with key players in the region
The need for large investment in infrastructure continues to be a major focus for Latam governments
Official Agencies may provide support through partial credit guarantees or buyer credit guarantees to increase the credit quality of these transactions in order to attract a broader set of investors
*Industry chart represents 2008 transaction for EAF Latin America.
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Recent Experience with Multilateral Agencies
Peru LNG
Onshore and Offshore Collateral Agent
Itumbiara, Ituiutaba and Campina Verde Projects
Collateral and Depositary Agent
Asian Development Bank
Issuing and Paying Agent
The International Bank for Reconstruction and
Development
Issuing and Paying Agent
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Corporate Trust Services for Multilateral Agencies in Latin America
Citibank Agency and Trust
Agenda
Profile of the Trustee in Panama Sheyla Soto
Use of ‘CKDES’ for Infrastructure Projects in Mexico Manuel Paullada
Business Sectors Driving Growth in Argentina Manuel Tristany
Mandatory Legal Reserve for Local Currency Deposits of Foreign Financial Institutions in Peru Alejandro Espinel
Tax on FX for Non-Residents - IOF in Brazil Andre Pina
Foreign Exchange Regulations that apply to Offshore Accounts Opened by Fideicomisos (Trusts) in Colombia John Rojano
Cross Border Capabilities Paul Burke
Ernesto Sarria Moderator
1
Profile of the Trustee in Panama
Panamanian trusts are regulated by Law #1 and Executive Decree #16 of 1984: – Independent trust companies, insurance companies, banks, lawyers and other natural or
juridical persons may act as trustees.
Only those trustees that conduct the trust business professionally and customarily (3 or more p.a.) shall obtain a fiduciary license from the regulator, the Superintendence of Banks of Panama (SBP). – Licensed trustees shall maintain a guarantee in the amount of US$250,000 to assure the
compliance of obligations. Not less than 10% of the guarantee shall consist in restricted deposits at any of the two Panamanian Public Banks.
– Corporate trustees shall have their stock shares issued nominally, and every transfer of shares requires the prior approval of the SBP.
There are more than 60 licensed trust companies, and the number is growing every year, with a total of US$8.4 billion of assets under trust.
Citi is present in Panama since 1904 and has been offering fiduciary services in this country for more than 16 years.
Sheyla Soto Citibank, N.A. Panama Branch
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CKDES are securities recently developed by the Mexican Capital Markets oriented to: • Enhance the infrastructure development in Mexico • Capture part of the huge liquidity of domestic public pension funds (Afores) by offering new
asset classes in structured finance products • Support other sectors such as Real Estate or more diversified via Private Equity investments
Use of ‘CKDES’ for Infrastructure Projects in Mexico
MAIN CHARACTERISTICS Trade publicly in Mexican Stock Exchange Returns linked to underlying asset/investment Does not require principal and interest payments Corporate Governance transparency Investments according to a specific calendar and policies Oriented to QIBs mainly Afores and to lesser extent Insurance
Companies and Private Pension Funds No ratings required Daily price valuations provided by price vendors Assets form part of a Trust Estate and Trustee issues the CKDs
MARKET REQUIREMENTS Attractive and sustainable Business Plan Manager/operator with successful track-record General Partner considerable co-investment Anchor investor participation Defined exit strategy Attractive risk – reward relation
Total Assets Under Management by AFORES (oct 10’)
$111,544 billion
Allowable funds to be invested in CKDES, and other Structured Financial Securities
$13 billion
** Source: Consar Note: USD Figures with an Exchange Rate of MX $12.70
Manuel Paullada Fiduciario Banamex
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Nine Closed Transactions in Last 12 months – $1.9 billion SPECIFIC PROJECTS INFRASTRUCTURE
RCO Macquarie Wamex Atlas Discovery Nexxus Capital Promecap AMB Prudential Artha Capital ASSETS Toll Roads Construction
contracts/ projects
Diversified Middle Market
Service & Consumer
High Growth Financial, Health,
Education & Consumer
Airports, Distressed
Assets & Credit Portfolios
Industrial & Logistics Industrial,
Residential & Retail
Land Developers for Housing, Tourism & Commerce
$516 MKT VALUE (MM) MATURITY 28 10+2+2 10 10+1 10+1+1 10 10 10+2 10 CO-INVESTMENT *ICA & GSIP will
Invest $160 5% 2% of the SPV Investments 2% of the SPV
Investments 2.5% of the SPV Investments 10% Issued amount 20% 20% or up to MX $600 5%
** Source from Purchase or Underwriting Agreements Note: USD Figures with an Exchange Rate of MX $12.70
PRIVATE EQUITY FUNDS REAL ESTATE
$269 $59 $91 $115 $197 $260 $244 $192
INFRASTRUCTURE
Navix Energy project (Pemex-CFE)
MBIA Diversified Marhnos
Residual Water Plants
Infraestructura Institucional Roads, bridges, ports, schools,
hospitals
Protego
Water, transport, environmental,
communications
REAL ESTATE
Vertex Housing
Alsis Housing IGS
Industrial, offices, distribution
Grupo Lar Public social services,
water, communications
PRIVATE EQUITY FUNDS
EMX Capital I Diversified -
Growth Alta Growth Capital Consumer, Financial
Education, Healthcare, Entertainment
Pro Equity Education, Energy,
Healthcare
Strong Pipeline more oriented to Infrastructure
Use of ‘CKDES’ for Infrastructure Projects in Mexico Manuel Paullada
Fiduciario Banamex
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Business Sectors driving of growth in Argentina
Argentina has the sixth largest reserves of minerals in the world, behind China, Peru, Philippines, Brazil and Chile): – Today there are twelve mines that are currently operating, three under construction and
around 400 prospects at different stages of development – In 2011 two projects will commence operations: Pascua-Lama (Barrick Gold) and Potasio
Rio Colorado (Vale), doubling GDP from around 2% in 2010 to around 4% by 2011 – Main exports are gold, copper, aluminum and silver, which represent around US$4.4
billion or 6.0% of total annual exports – The key aspect why Argentina is expected to be a key player in mining is because of the
fiscal and other benefits granted to mining activities by the Mining Investments Law of 1994 and supplements
Recuperation of the international market for Biodiesel due to the price increase – Production of Biodiesel has grown 4-fold from 660M tons in 2007 to 2.4MM tons in 2010. – New government regulation increased the use of Biodiesel in mix of gasoline – Advantages of Argentina as a producer of Biodiesel
Most advanced soy producer in the world (5.5% of global market) Record soy crop with 52.7 MM tons
Manuel Tristany Citibank, N.A. Argentina Branch
2
Mandatory legal reserve for Soles deposits of foreign financial institutions in Peru
Peru's Central Bank increased the mandatory legal reserve requirement for foreign banks depositing local currency in the domestic banking system to 120% from 65% effective September 1st: – Central Bank has been managing the mandatory legal reserve levels as part of its
monetary policy – Peruvian Nuevos Soles reached a two-year high in August vs. the US Dollar.
The measure seeks to deter "short-term speculative funds" from entering the Peruvian financial system and destabilizing the currency, affecting all capital inflow even in cases when funds are not speculative in nature.
With a strong economy based on mining, energy and fishing, and a managed budget, Peru has become a renowned attraction for foreign investors.
Citi local expertise provides an efficient solution to foreign investors managing local projects with structures that require to raise capital in foreign markets.
Citi Agency and Trust can structure solutions that would allow to Foreign Financial Institutions to have Peruvian Soles as collateral for Project Finance or Collateralized Lending transactions without having to worry about the mandatory legal reserve or its associated cost.
Alejandro Espinel Citibank del Perú S.A.
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Brazil IOF – Tax over Financial Transaction
IOF tax is applied over a range of different financial transactions
Short Term Investments – Tax rate decreases as the tenor of the investment increases. – Tax doesn’t apply for investments over 30 days – The tax applies over the earned interests
FX (Regulations & Norms: Decree No 6.306/07) – 4 different type of FX taxes apply depending on the activity:
Export of goods and services Import of goods and services Inflow from financial-related deals Outflow from financial-related deals
– Currently, most foreign exchange transactions are taxed at the rate of 0.38% Companies which have dollars account in Brazil are waived of this fee
Andre Pina Citibank Brasil S.A.
* This material should not be considered as a tax advice, as for the correct definition and calculation of taxes na indivudual analysis of the transaction by customer is necessary. Banco Citibank S.A. is not authorized to perform tax advisory to its clients. Specific cases should be evaluate by customers with their own tax specialists.
3
FX Regulations that apply to Offshore Accounts of Fideicomisos in Colombia
In Colombia the Central Bank is responsible for Exchange Regulations and managing, recording and authorizing changes in foreign investment
The regulations allows Trusts (Fideicomisos) to open and administer offshore accounts (in foreign currency) and register them as ‘Compensation’ accounts for collection of export receivables and debt service payments
The opening, managing and closing of ‘Compensation’ accounts are subject to the reporting requirements of the Central Bank of Colombia and the Direction of National Taxes and Customs (DIAN, for its acronym in Spanish)
Citi has the ability to open DDA accounts in New York and register them as ‘Compensation’ accounts in order to be authorized to make payments to foreign suppliers and make reserves and loan payments for a Project Finance transaction
Citi has the ability to make the reports for the Colombian Central Bank according the Foreign Exchange regulation. Few fiduciaries companies in Colombia have this capability
John Rojano Cititrust Colombia S.A.
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Paul Burke Citibank, N.A.
Cross Border Capabilities & Services
Activity Key Citi Agency & Trust Services
Eurobonds
Escrow Escrow Agent, Account Administrator, Environmental Escrow
M&A Services Custodian, Tender Agent, Escrow Agent, Registrar, Exchange Agent, Closing Agent
Project Finance Security Trustee, Collateral Agent, Trustee, Escrow Agent, Depository, Accounts Bank
Structured Finance
ALM / Debt Exchange Exchange Agent, Trustee, Depositary, Registrar, Calculation Agent
Global Loans Collateral Agent, Account Bank, Administrative Agent
Issuing and Paying Agent, Trustee, Depository, Registrar, Calculation Agent, Fiscal Agent
Trustee, Paying Agent, Calculation Agent, Bond Analytics, Investor Reporting, Tax Reporting
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Agency & Trust is No. 1 in Service Month after Month
Agency & Trust has consistently been a top performer in DTCC’s Industry Report Card
Legend: 1 = Best 6 = Worst Latest DTCC ranking: May 2010
Rates Open at COB P/D - 1
Late Rates after 3:00 pm Cut-off on P/D
Amended Announcements
Amended Announcements 30
Days + after P/D Bank of America 4 1 6 6
Bank of New York Mellon 6 6 4 4
Citibank 1 1 1 1
Deutsche Bank 2 4 5 5
US Bank 2 1 1 3
Wells Fargo 5 5 3 2
Current DTCC Agent Report Card
Rankings based on a percentage of an agent’s total rates – Best three in each category highlighted in blue
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Lima Airport Partners
Trustee and Collateral Agent
Uirapuru
Collateral Agent and Depositary Bank
Peru LNG
Onshore and Offshore Collateral Agent
Select Latin America Transactions
ATE Project Finance
Collateral Agent
Itumbiara, Ituiutaba and Campina Verde Projects
Collateral and Depositary Agent
Transportadora de Gas del Peru
Collateral Agent and Trustee
IIRSA Norte, IIRSA Sur Tranches 2 and 3
Trustee, Indenture Trustee, Issuing and Paying Agent,
Registrar, Comparison Agent
Survial
Trustee and Verification Agent
Petrobras Revap / Refap
Collateral Agent and Depositary Bank
Terminal de Contenedores de Buenaventura
Collateral Agent and Trustee
Panama Canal Railway Co.
Collateral Agent, Trustee, Registrar and Paying Agent
Tenedora Nemak
Collateral Agent
Sociedad Minera Cerro Verde
Onshore and Offshore Collateral Agent
Votorantim purchase of equipment from Sinoma
Escrow Agent
Indiana Toll Road
Trustee
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© 2008 Citigroup Global Markets Inc. Member SIPC. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
© 2008 Citigroup Global Markets Limited. Authorized and regulated by the Financial Services Authority. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
© 2008 Citibank, N.A. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
© 2008 Citigroup Inc. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
© 2008 [Name of Legal Vehicle] [Name of regulatory body.] All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates and are used and registered throughout the world.
efficiency, renewable energy & mitigation
In January 2007, Citi released a Climate Change Position Statement, the first US financial institution to do so. As a sustainability leader in the financial sector, Citi has taken concrete steps to address this important issue of climate change by: (a) targeting $50 billion over 10 years to address global climate change: includes significant increases in investment and financing of alternative energy, clean technology, and other carbon-emission reduction activities; (b) committing to reduce GHG emissions of all Citi owned and leased properties around the world by 10% by 2011; (c) purchasing more than 52,000 MWh of green (carbon neutral) power for our operations in 2006; (d) creating Sustainable Development Investments (SDI) that makes private equity investments in renewable energy and clean technologies; (e) providing lending and investing services to clients for renewable energy development and projects; (f) producing equity research related to climate issues that helps to inform investors on risks and opportunities associated with the issue; and (g) engaging with a broad range of stakeholders on the issue of climate change to help advance understanding and solutions.
Citi works with its clients in greenhouse gas intensive industries to evaluate emerging risks from climate change and, where appropriate, to mitigate those risks.
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