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OAS Hosts Roundtable on Responsible Corporate Debt Issuance

  September 5, 2012

The Organization of American States (OAS), together with the Inter-American Development Bank (IADB) and the Development Bank of Latin America (CAF), today hosted a Policy Roundtable to discuss the importance of corporate governance in debt issuance, a subject whose importance has grown during the global economic crisis of the past three years.

The event featured the presentation of a research project entitled “Corporate Governance in Brazil, Colombia and Mexico” by Professor Germano Mendes de Paula of the Economics Institute of the Federal University of Uberlândia in Brazil, and a panel, moderated by Nora Lustig, Professor of Latin American Economics at Tulane University, which included the Secretary General of the OAS, José Miguel Insulza, the Executive Chairman of the Development Bank of Latin America (CAF), Enrique Garcia, the President of the Inter-American Development Bank (IDB), Luis Alberto Moreno, and the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, who appeared in a video shown at the event.

In his welcoming remarks, the OAS Secretary General highlighted the importance of corporate governance in debt issuance for its key role in making available to businesses “greater diversification in funding, tools for investment, greater competitiveness, better positioning against competitors and in value chains, increased liquidity and better overall performance as a company.”

“The issuance of bond debt” said Secretary Insulza, “makes the process of investing in a company more controlled, efficient, transparent, and increases confidence in general,” adding that “creating greater confidence in the financial system and improving the corporate governance of each company are cornerstones to strengthening our financial systems.” But he warned that, in order to protect investors and promote transparency, “bond issuances demand minimum listing requirements and this is one of the most profound changes that Latin American businesses will have to apply.” The Secretary General also emphasized that “proper governance eases the operation of a socially responsible and sustainable organization, and allows for the measurement of the social and environmental impact of their investment.”

The moderator of the Roundtable, Nora Lustig, presented the context for the discussion, asking if Latin America had really experienced “a decade well taken advantage of,” or if the good growth was due to special circumstances including market growth in China. In this context, she explained, the mechanism of “private debt securities” can be very helpful, given the right conditions. “The second thing that worries us,” added Professor Lustig, is that “when there is an increase in debt, the question is whether this debt boosts growth or creates the conditions for crisis.”

The President of the IDB, Luis Alberto Moreno, pointed to a current paradox of Latin American economies based on “the enormous amount of international reserves that we have today.” He said “suddenly, thanks to macroeconomic stability, we have begun to accumulate savings, and yet we do not have mechanisms to move those savings to the productive sector which is the one that most needs to grow.” He explained that improving corporate governance would help to resolve this paradox and also to create a virtuous circle: “once companies start to honestly state their balances, they immediately begin to become companies that pay taxes at a much better rate than before.”

For his part, the President of the CAF, Enrique Garcia, expressed that the current stage the Latin American economies are experiencing is the best in recent decades, and said that this is partly due to the improvements in the macroeconomic stability of the region. However, he said, “There is life beyond macroeconomic stability.” Improving corporate governance is crucial, he said, in order that companies “can have not only a proper business structure, but access to resources beyond their own savings.”

Although she was unable to travel to Washington to attend the event, the Executive Secretary of ECLAC, Alicia Bárcena, sent a video in which she emphasized that “good corporate governance is a central factor in the development of capital markets, and should play an important role in long term financing.” She thanked the work of the researchers involved in the study presented at the forum, stressing that “the proposed methodology presented, an indicator of corporate governance for the issuance of private debt, aims specifically at improving management in corporate governance through prudent risk management and mediation and control in local investment projects regionally and internationally.”

A gallery of photos of the event is available here.

The video of the event is available here.

For more information, please visit the OAS Website at

Reference: E-300/12