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AmericasNovember 7 2005

CSFB’s long haul pays off in Brazil

Investment banks are often criticised in emerging markets for being fair weather friends: moving in when times are good, running for the exit when the market turns down. But if you take over a major domestic player, you are pretty much obliged to stick around.
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Credit Suisse First Boston bought Brazil’s Garantia in 1998 after its traders came unstuck in the Brady bond market. The years immediately following were tough as Brazil’s currency fell out of its peg and it had to borrow from the IMF.

Today the capital-raising environment in Brazil is the best anyone can remember. “Over the last two years, we have seen a window of opportunity open up for Brazilian companies to tap the market for debt and equity on a scale we haven’t seen for a while and with valuations that we haven’t seen ever,” says Antonio Quintella, CSFB’s Brazil country head.

Having stuck it out through the bad times, CSFB is now cleaning up. It is the top equity underwriter this year with a 33% market share, ahead of UBS and Unibanco. It came second after JPMorgan in high-yield globals in the first half with a 14% market share and second to Merrill Lynch in total bond issuance with a 22% market share.

CSFB runs its Latin American business out of São Paulo with 50 people on the ground rather than have the bulk of the staff in New York, as do many rivals. This helps it to get near the customer.

But could stiff competition be on the way? Goldman Sachs (which talked to but missed out on Garantia) is negotiating to buy Pactual, which topped the equity table in 2004 and is currently fourth. The two together would be a formidable force.

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