Excerpted from the
Latin America Equities Investment Report 2003
Research Group
A REUTERS INSTITUTIONAL INVESTOR RESEARCH PUBLICATION
Investment banking &
capital markets
Are companies raising capital
50
Important equity attributes
51
Important debt attributes
51
For ease of reference, the charts are color-coded to reflect the source of data:
Buy-side Analysts/Portfolio Managers
Buy-side Traders
Companies
Sell-side Analysts
External Sources
Multiple Sources
Note: Where no key is present, year-on-year comparative data for buy- and sell-side firms is as follows:
darker-shaded bars represent 2003 data and lighter-shaded bars represent 2002 data.
© Institutional Investor Research Group 2003
The Reuters Institutional Investor Survey
54
investment banking & capital markets
Latin America Equities
Investment banking & capital markets
This year’s investment banking attribute ranking is based
on 21 responding companies. J. P. Morgan dominates the
results, taking first place in all four categories.
How companies spend their time
communicating with investment banks
Advisory: 31.48%
Expected change
A majority of companies, 57 percent, say they are currently
not raising capital. Moreover, these companies do not expect
this to change in the coming year. Company preference for
debt financing has deepened with 86 percent of
respondents expecting it to remain their primary source of
capital compared to last year’s 77 percent. Equity is increasingly the least favored financing route as investors become
more risk adverse.
60.71%
14.29%
Decrease
Stay the same
25.00%
Company opinion on investment banking attributes for
equity and debt differ significantly from last year. Coming
off a period when equity IPOs and follow-on stock
offerings were scarce, companies last year ranked
relationship-based attributes most important—namely
“transaction experience in sector” and “credibility of
investment banking service across all products.”
Increase
Equity financing: 7.48%
Expected change
17.39%
However, their focus seems to have shifted. Companies
are again placing more weight on transaction-based
attributes, with “pricing of transaction,” “underwriting &
distribution capability” and “execution of transactions”
ranked most important.
Decrease
Stay the same
82.61%
Are companies raising capital?
Increase
Debt financing: 61.04%
Expected change
43.24%
42.86%
Yes
56.67%
56.76%
57.14%
No
Decrease
10.00%
Stay the same
Increase
Current
33.33%
Expected
Company ranking: investment banking attributes
First
Second
Third
Credibility of investment banking services
J.P. Morgan
Smith Barney Citigroup
UBS Warburg
Quality of domestic M&A ideas
J.P. Morgan
Deutsche Bank Securities
Merrill Lynch
Quality of nontransactional advisory
J.P. Morgan
Goldman, Sachs & Co.
Smith Barney Citigroup
Quality of ongoing relationship
J.P. Morgan
Smith Barney Citigroup
Goldman, Sachs & Co.
55
The Reuters Institutional Investor Survey
© Institutional Investor Research Group 2003
Latin America Equities
investment banking & capital markets
Equity Offerings by Latin American Issuers
01/01/1999-06/23/2003
Research Group
12,000
10,000
8,000
6,000
4,000
2,000
0
1999
2000
2001
2002
2003
Source: Dealogic
Means of raising capital
Debt
Other/Not sure
84.21%
Convertible bonds
85.68%
0.91%
3.41%
0.42%
7.25%
Equity
10.00%
8.13%
Current
Expected
Important debt attributes
Important equity attributes
Score*
Score*
Pricing of transactions
Execution of transactions
Underwriting and distribution capability
Credibility of investment banking service
across all products
Quality of financial advice on transactions
Transaction experience in your sector
Market support after transaction
Quality of ongoing relationship
Quality of nontransactional advisory
Quality of international M&A ideas
Quality of domestic M&A ideas
9.11
8.89
8.89
8.37
8.32
8.21
8.16
7.79
6.89
6.71
6.41
*Scale of 1 to 10, with 1 being of lowest importance and 10 the highest
© Institutional Investor Research Group 2003
Pricing of transactions
Underwriting and distribution capability
Execution of transactions
Quality of financial advice on transactions
Market support after transaction
Transaction experience in your sector
Quality of ongoing relationship
Credibility of investment banking service
across all products
Quality of nontransactional advisory
Quality of international M&A ideas
Quality of domestic M&A ideas
8.77
8.60
8.54
8.38
8.04
8.04
7.81
7.65
6.62
5.86
5.82
*Scale of 1 to 10, with 1 being of lowest importance and 10 the highest
The Reuters Institutional Investor Survey
56
Latin America Equities
investment banking & capital markets
Research Group
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© Institutional Investor Research Group 2003
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