Citi Corporate Trust Services for Multilaterals in Latin America

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Today’s infrastructure financing depends more on Multilateral Agencies, and their volumes of loans have increased significantly in recent years.

Partnering with a local trusted partner that provides insight in dealing with foreign laws and regulations can prove invaluable. Citi Agency and Trust, your trusted global bank, has the biggest network presence in Latin America with presence in the entire region. The unique knowledge of local markets, the depth and breadth of our experience and the standards of a global bank are just some of the key advantages in working with Citi Agency and Trust. We provide a full suite of Corporate Trust products that can be tailored made to attend your needs.

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Citi Corporate Trust Services for Multilaterals in Latin America

  1. 1. Corporate Trust Services for Multilateral Agencies in Latin America Citibank Agency and Trust
  2. 2. 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 1
  3. 3. Citi’s partnerships with Multilateral Agencies Alan Smith Global Head of Issuer Services
  4. 4. 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 1
  5. 5. 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. 2
  6. 6. 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 4
  7. 7. Corporate Trust Services for Multilateral Agencies in Latin America Citibank Agency and Trust
  8. 8. 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
  9. 9. 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 7
  10. 10. 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 5
  11. 11. 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 $516MKT 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 6
  12. 12. 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
  13. 13. 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. 8
  14. 14. 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
  15. 15. 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. 4
  16. 16. 16 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 9
  17. 17. 17 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 10
  18. 18. 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 1811
  19. 19. [TRADEMARK SIGNOFF: add the appropriate signoff for the relevant legal vehicle] © 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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