Re: Enron's Country Curves

---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 09/15/2000
04:37 PM ---------------------------

Maureen Raymond
09/14/2000 04:54 PM
To: Jim Cole/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jirayut
Rungsrithong/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, James A
Hughes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Vince J Kaminski/HOU/ECT@ECT
cc:
Subject: Re: Enron's Country Curves

Jim,

In response to the 3 questions below:

Who prepares Enron's country curves? - The Foreign Exchange and Country Risk
group within Enron North America's Research Group is responsible for
producing the forecasts of inflation and foreign exchange.

What is the criteria in determining the curves? Please explain. - The FX and
Country Risk team analyses a host of data and information to forecast foreign
exchange curves and predict inflation. Primarily, we depend on the work of
the Institute of International Finance (IIF), we also talk with their staff
Senior Ph.D. Economists. We review the current macroeconomic policy mix
including monetary, fiscal and exchange rate policies and their
sustainability. We also analyze the balance of payments to make sure their
are no pressures on the current account, capital account or foreign exchange
reserves. In addition, we look at economic output in light of all the above
mentioned factors and incorporate our global outlook of global growth and
international commodity prices. Then we determine our expectations for
changes to these conditions based on many domestic and international
factors. We also evaluate the progress of IMF program and the countries
ability and willingness to meet the IMF criteria, and whether or not they are
in compliance with the Fund. In addition, we analyze the political
risk/stability of the country, timing of elections and or major
constitutional or policy changes which would have a major impact on the
economy. We also perform a ratio analysis of a country's ability to repay
its debt in the context of debt-to-GDP ratios, debt service, import coverage,
FDI-to-current account, etc. We analyze the stability of the country's
banking system, level non-performing loans-to-total, bankruptcy laws, and
progress on restructuring bad debts. All these factors influence the
outlook on local price changes and movement of the exchange rate.

How often do the curves get updated? - Curves are updated upon request from
the Enron business units or RAC. The business units need to have the curves
updated before Risk Assessment and Control evaluates the projects.

Maureen Raymond-Castaneda

Jim Cole@ENRON_DEVELOPMENT
09/13/2000 12:14 PM
To: Maureen Raymond@ECT
cc:
Subject: Enron's Country Curves

Maureen,
Could you please answer the three brief questions below ASAP?

Thanks,
Jim
---------------------- Forwarded by Jim Cole/ENRON_DEVELOPMENT on 09/13/2000
12:18 PM ---------------------------

Ramon Rodriguez
09/13/2000 12:16 PM
To: Jim Cole/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Lian Ji/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT

Subject: Enron's Country Curves

Jim,

Please call Maureen or your contact TONIGHT to get the appropriate response.

R

---------------------- Forwarded by Ramon Rodriguez/ENRON_DEVELOPMENT on
09/13/2000 11:36 AM ---------------------------

Jirayut Rungsrithong
09/13/2000 04:15 AM
To: Ramon Rodriguez/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:
Subject: Enron's Country Curves

Ramon:

We received questions from the lenders re: Enron's country curves:

Who prepares Enron's country curves?
What is the criteria in determining the curves? Please explain.
How often do the curves get updated?

Could you please answer these questions?

Regards,
Jay