Carlos Vara, co-head of Citi’s LatAm investment banking unit, has left the firm, say people familiar with the matter. Friday was apparently the last day for the Mexico-based executive. The reason for his departure is not clear, though some speculate the choice to leave was voluntary. The investment banking business that Vara helped run covers advisory, M&A and the equity product on occasion. Ricardo Lacerda, Vara’s former co-head based in Sao Paulo, remains at the firm, say company officials, though it is not clear who will replace Vara to run Mexico. A Citi spokeswoman declines to comment.
Yearly Archives: 2008
Posted inDaily Brief
IDB Extends Credit Line to Colombia
The IDB has announced that it has approved a $650m credit line to Colombia to help Bancoldex finance investment projects and develop exports. It will initially receive a $100m loan. It will also receive an additional $650m from the local government. The loan is for a 25-year term with a 4-year grace period at an adjustable rate based on Libor.
Posted inDaily Brief
Norsemont Hires Paradigm Capital as Advisor
Norsemont Mining has notified Peru’s Conasev that it has hired Paradigm Capital to act as its exclusive financial advisor. Canada-based Paradigm’s hiring comes shortly after the miner received unsolicited expressions from third parties interested in buying it. Andrew Partington, a partner at Paradigm, tells LatinFinance that a timeframe has not yet been set as to when deal books will go out. Norsemont had already hired Fraser Milner Casgrain as legal counsel. Norsemont, which is based in Canada and operates the Constancia project in southern Peru, has a market cap of CAD103m.
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Weak Oil Undermines Venezuela Nationalizations
With the price of oil now estimated to average $50-$60 a barrel in 2009, Venezuela will be forced to re-evaluate its nationalization plans. “The government prepared its budget based on $60 per barrel for the Venezuelan basket,” says Fitch analyst Erich Arispe. However, he adds that during the past 3 years, it spent on average 30% more than budgeted. With prices for the Venezuelan basket currently worth $36 per barrel, according to Barclays senior economist Alejandro Grisanti, the government is going to have to decide what its priorities are. On one hand, cutting spending on social programs or political campaigns may hurt Chavez’s political ambitions, particularly that of amending the constitution so he can run for office indefinitely. “This will mean that the possibility of adjusting government spending to the new low oil price environment will be limited,” Arispe says. On the other hand, Chavez could try to delay announced nationalizations or reduce the prices for the nationalization of Banco de Venezuela and Cemex, citing their drop in valuations, Grisanti says. Banco de Venezuela alone could be worth around $1.5bn, according to a credit analyst who asks not to be identified.
Posted inDaily Brief
Vale Cuts Workforce and Output
Frequent LatAm issuer Vale is responding to the commodity slump with significant reductions in headcount and output. As slims down its iron ore production, cuts in workforce and output are hitting Brazil. Some 20% of the 1,300 layoffs the company has announced, and about 80% of the more than 5,000 workers placed on paid leave are in Minas Gerais, a company spokesperson said. Also, a portion of the 1,200 employees being retrained are in Brazil, but a spokesperson is unable to say exactly how many. Vale aluminum subsidiary Valesul in Rio de Janeiro will reduce output to 40% of capacity. At full capacity it produced 95,000 metric tons of aluminum a year. Another subsidiary, kaolin producer Cadam in Para, is cutting production by 30%, Vale says.
Posted inDaily Brief
Brazil Growth Seen Slowing
For 2009, Credit Suisse forecasts a drop in Brazil’s GDP growth to 1.3% down from previous expectations of 2.8%, a rise in average annual unemployment to 9.0% from 7.9% in 2008, a decline in trade balance to $14bn from $24bn in 2008 and a drop in primary surplus to 3.4% of GDP from 4.5% in 2008. It also expects the country’s international reserves to remain stable at $190bn, and the real’s value to stay at BRL2.20/USD until the end of 2009. The shop forecasts that the Selic rate will only be cut by 25bps in 2009 to 11.25%.
Posted inDaily Brief
Banco Industrial Outlook Seen Worsening
Fitch has cut to stable from positive the outlook on the BB ratings of Banco Industrial amid a worsening environment in capital markets that complicates capital enhancement alternatives. Guatemala’s biggest bank had been trying to do an IPO earlier this year, but opted instead for a $35m 2068 Tier-1 hybrid paying 9% for 10 years and Libor plus 600bp thereafter. The April offering through Credit Suisse was placed only with Guatemalan investors and fell well short of a $100 million target size. The prior positive outlook from Fitch reflected perception that capital adequacy would improve following certain strategies that the management has pursued. “Weakening economic prospects are likely to impact Industrial’s impairment loan ratio, its provisions and overall performance, a confluence of factors that is consistent with Industrial’s current ratings, hence Fitch’s outlook revision to stable,” says the agency. It notes that Industrial maintains a robust franchise in Guatemala, low level of loan delinquency, improving efficiency and profitability, and adequate funding and liquidity. However, it also has a tight capital position following ample organic and acquisition-driven growth over the past two years, limited and declining loan loss reserves and modest revenue diversification. If Industrial hits difficulties, Fitch believes the government of Guatemala would have a vested interest in supporting it, given ample deposit market share.
Posted inDaily Brief
S&P Affirms Suriname’s Ratings, Outlook
S&P has affirmed its B+ long-term foreign currency, BB minus long-term local currency and B short-term sovereign currency rating. The outlook remains stable, the agency says, citing the country’s improving macro fundamentals, robust medium term growth prospects, strengthened debt position, and, most importantly, efforts on the legislative and institutional fronts to preserve strength beyond economic and political cycles. S&P expects Suriname’s international reserves to grow while debt declines in 2009, despite the drop in commodities, which should lead to lower fiscal surpluses, below 1% of GDP, and slower economic growth through 2010.
Posted inDaily Brief
BMSC Frets Over Political Risk
Banco Mercantil Santa Cruz (BMSC), Bolivia’s biggest bank, says it is concerned about the local political environment in the medium to long term, including the threat of nationalization. “If there is a risk, it’s very far down the line. [The president] has got a lot of nationalizations to go through before us,” Darko Zuazo Batchelder, BMSC’s vice president, tells LatinFinance. He adds that he does not expect the bank to become a target of the government in 2009 or 2010. “We’ve got time to prepare . . . we just have to manage our risk,” adds the banker. BMSC is worried about increased economic instability undermining president Morales and forcing him to take more drastic measures to fortify his popularity. “That’s where we’re worried. Right now he’s popular, he doesn’t need to attack,” says Zuazo. “We do believe that times are going to get tougher for our president,” he adds. The Bolivian government shocked investors in May with the seizure of four energy companies and a telecom, amid a wider nationalization spree.
Posted inDaily Brief
ISA Prices COP105bn Local Retap
Colombian state-controlled electricity grid operator Interconexion Electrica has priced COP104.5bn ($46m) in reopened 2026 bonds. The notes paying a coupon of the IPC rate plus 4.58% were discounted through an auction mechanism resulting in a yield of IPC plus 7.1%. The transaction was 1.63x subscribed. Citi, Correval and Bancolombia managed the sale, rated AAA on a national scale.