Corporate Y2K trouble expected in LatAm

The effects of the year 2000 bug could be felt more strongly in Latin America than in other parts of the world because of economic problems plaguing the region, according to a Duff & Phelps Credit Rating (DCR) analyst.

"Unfavorable economic conditions and a lack of financial resources could make the fallout from any major Y2K-related problems more severe in Latin America than in other regions, impacting corporate entities in the region," wrote Edward Sherman in a recent article published by DCR.

Latin American companies expected to fare better than their counterparts are those that are either wholly- or partly-owned by a company based in a developed country, those that have enough money to invest in a year-2000 solution, those whose well-being affects many outside groups, such as investors and large customers, and those with a good management structure, according to the article, titled "Y2K still a concern for Latin corporates."

However, even companies in Latin America that have solved their year-2000 problems, tested their solutions and implemented contingency plans are at risk because basic services, such as telecommunications and power, are more likely to be affected by the year-2000 problem in countries with emerging economies, according to Sherman.

"Even if a Latin American firm has addressed virtually all of its internal Y2K issues, it still faces risks associated with being domiciled in an emerging market," he wrote.

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