International banker: Transparency helps investment

“Where are the international portfolio investors?” That was the question  asked by one international banker attending  a  workshop session, titled, “Funding Challenges facing the private sector in Central America and the Caribbean” at  the third Euromoney and Latin Finance Caribbean Investment forum held in the Dominican Republic recently. Jay Pierce, Head of Research, New York Secutities, Standard Bank Group, said the flow of funds was not coming to the Caribbean. As a result, it was missing out on the opportunity for cheaper financing and the chance to diversify their  risks. But as one attorney from the Dominican Republic  noted, becoming transparent was extremely expensive. Peirce, in his response, noted that that while costs were significant, the benefit of transparancy far outweighed other considerations. Transparency, he stressed, helped encourage foreign investment and capital inflows.  The lack of transparancy and disclosure, insufficient legal infrastructure to protect creditors from bankruptcy as well as the lack of diversity of instruments to invest in sectors across companies were some of the reasons cited by Maria Teresa Beyra, Stardard Bank Group, for the dearth of interttional portfolio investors.

Capital markets, Beyra said, needed support from international regulators to ensure their information is up to scratch Berga stressed that credit rating was a significant indicator for emerging markets, noting that the last thing a country wanted was to be percieved as corrupt and warned that this could prove damaging to investor confidence. Investors, she said, are interested on focusing on maximising their asset value, lower risk premium and transparency. Particia Calvo, Associate Director of Corportate Ratings, Standard and Poor’s, Mexico, noted that gradings and ratings impact on investment in developing countries. Such ratings, she said, not only fosters growth of the capital market but also gives credit worthiness to companies. In places where there were currency restrictions and transactions were shrouded in secrecy, there was little hope to develop capital markets. TT Deputy Central Bank Governor Amoy Chang Fong noted that the bank was moving to set up its own credit rating agency, noting that “ not everybody was going to go for international rating.” She noted that this local rating was going to be beneficial for small companies and could be used a benchmark for the local market.