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Latin America's largest economies are on the mend following a jarring three years of weak commodity prices and falling currencies. The BRL, CLP, COP and PEN have all hit what appear to be inflection points in 2016, breaking from their steady decline against the USD that began in 2014 and 2015.
More a stabilizing force than any substantive relief, the price of oil has climbed steadily since its dip below USD 30 a barrel in early January, hovering consistently above USD 45 since May. The persistent glut in global supply doesn't have Latin America's oil exporters celebrating, however, and the moderate rebound won't suffice to shore up hollow state coffers or lend a lifeline, in the most extreme case, to Venezuela's Nicolas Maduro, who clutches to his office as the country implodes around him. It would appear only China and its thirst for Venezuela's heavy crude can bail out the indebted sovereign and stave off complete chaos in the Bolivarian Republic.
Deal flow picked up a hair in 1H16 over 1H15, with 781 M&A transactions region-wide, compared to 772 to the close of June last year. Deal volume rose to 956 when asset trades are included in the tally, compared to 939 in 1H15. Aggregate transaction value dipped, meanwhile, from USD 57.2bn to USD 49.4bn region-wide in 1H16. Growth in deal volume and ticket size will need to be robust through the end of 2016 merely to bring regional aggregate value up to 2015 levels by year-end.
Despite its troubles, Brazil continues to garner the lion's share of M&A in the region, followed by Mexico and Chile. Argentina has risen quickly back to good graces, ranking fourth regionally in 1H16 by inbound M&A volume, overtaking Colombia and Peru, with 37 transactions compared to 19 in the preceding six-month period and 32 in 1H15. President Mauricio Macri's reforms are paying off, the sovereign's debt is in demand and international acquirers once again have Argentina in their sights.
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