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Capital markets deals were slow to get off the ground in the winter of 2009 when the global financial crisis hit Latin America. Since then the region saw a series of restructuring and distressed offerings and now has a few traditional deals in its pipeline....

Capital markets deals were slow to get off the ground in the winter of 2009 when the global financial crisis hit Latin America. Since then the region saw a series of restructuring and distressed offerings and now has a few traditional deals in its pipeline. "We saw the shift predominantly towards the debt markets," one lawyer says. "And now we're seeing it turn back slightly to the equity markets."

January and February were the slowest months, according to Latin America lawyers. Most of the deals they had lined up in Brazil and Mexico fell apart as buyers fled from the markets. Even underwriters ceased to take on deals, especially at an international level. "The capital markets took a big hit in the first six months," says one partner, who also mentions that nine of the ten deals he had been working on fell through during that time.

The restructuring craze took place mainly in the capital markets. Vitro, a prominent Mexican industrial company, restructured $1.29 billion in senior notes, derivative obligations and other unsecured debt. One of the largest priced deals to go through any market, the Vitro restructuring marked a strategy that lawyers say 50% of their clients were trying to use to stay out of insolvency. In the Caribbean Cap Cana closed the largest exchange offer in 2009 by offering $136 million in senior secured notes. The strategy was also at work in traditionally stable countries such as Brazil and Chile.

As the equity markets open, IPOs, Pipe (private investment in public equity) and more standard stock offerings are starting to come across law firms' desks. Most of the high-level partners report they're working on anywhere from ten to twenty offerings at a time, as opposed to none less than six months prior.

Distinct from other markets, M&A wasn't completely dead in 2009. Instead it varied from country to country....

Distinct from other markets, M&A wasn't completely dead in 2009. Instead it varied from country to country. Firms working in Brazil and Mexico saw a lot of work. In Brazil's case the work was mostly domestic or within south America. In Mexico, larger companies took advantage of prices in the US and started making deals. Meanwhile M&A all but stopped in countries once thought to be on the rise.

Very few deals were finished in Colombia or Chile, as most companies in those countries focused on stability before acquiring a potentially distressed asset. "It is really country-to-country right now," says one partner. "Many companies in the stalled countries aren't willing to give current valuations and others are willing to buy a distressed company at non-distressed prices."

The most highly publicised deal was Brazilian company InBev's acquisition of Anheuser-Busch for $52 billion. Despite Delaware Chancery Court litigation, Anheuser-Busch earned more than $70 per share for its brewery assets. Vale's purchases from Rio Tinto also continued this year, with the Brazilian mining company acquiring Rio Tinto's potash project in Argentina and its iron ore mine in Brazil for $1.6 billion in 2008.

From Mexico, Grupo Bimbo acquired US bakery Weston Foods for $2.5 billion in January. The deal started a trend that saw investors from Mexico take a stake in the largest US newspaper, the New York Times. More than three investment groups added $250 million to the newspaper as part of a restructuring by the New York Times.

Lawyers are hopeful that deals will pick up next year. In fact, one reports that he has more than six deals in the works. "Last year deals were dying on the vine," the lawyer says. "Next year the credit markets look better and companies are starting to open up. I don't think we'll see a repeat of 2009."

Unlike other markets, project finance did not disappear completely during the financial crisis. At the end of 2008 and early 2009, when most of the world was coming to grips with the post-Lehman Brothers financial chaos, the most ground-breaking deals of the region closed in countries such as Panama, Colombia, Brazil, Peru and Mexico....

Unlike other markets, project finance did not disappear completely during the financial crisis. At the end of 2008 and early 2009, when most of the world was coming to grips with the post-Lehman Brothers financial chaos, the most ground-breaking deals of the region closed in countries such as Panama, Colombia, Brazil, Peru and Mexico.

The largest development banks such as the International Development Bank, Inter-American Development Bank (IDB) and International Finance Corporation (IFC) have remained active, despite their commercial counterparts pulling out of Latin America.

Unsurprisingly, the firms with a historical strong hold in the region are the most active. These firms mainly work out of their Washington DC office, where the development banks are located, or have close ties through their New York offices. Local offices in Brazil rarely handle the work that often happens in developing countries.

Regional governments have been aggressive in trying to get new deals done in their countries. For example, the IDB and IFC issued a $2.25 billion loan in Peru to finance the Peru LNG (liquefied natural gas) project. The loan is the largest direct foreign investment in the country's history and the largest loans ever issued by IDB and IFC.

In Panama, some of the same banks helped the Panama Canal Authority in a $5.25 billion financing of the structure's largest expansion. Five multilaterals including IDB, IFC, the European Investment Bank, Japan Bank for International Co-operation and Corporación Andina de Fomento provided the loan.

While traditional commercial lenders such as JPMorgan and Morgan Stanley just about closed their project finance departments, the market has been inundated by development banks.

Most project finance lawyers aren't ready to predict the commercial banks' return, but do foresee a time when they find project finance profitable again. "They will definitely be back, but it's impossible to say when or how many will come back," says one.