Food inflation could start easing as early as May in LatAm, according to Barclays. Relief could come thanks to recent price drops in wheat and milk. “The relevance of food inflation for gauging overall inflation trends has become quite patent of late,” the shop says. Commodity-sensitive food prices accounted for roughly 30% of inflation in LatAm in 2007, according to Barclays.
Yearly Archives: 2008
Posted inDaily Brief
Mato Expands I-Bank Role at HSBC
Gerardo Mato, HSBC’s LatAm DCM veteran, has expanded his reach at the UK bank. Mato and Tom Cole were recently named co-heads of global banking, Americas. They report locally to Paul Lawrence, head of global banking and markets, Americas and functionally to Robin Phillips, head of global banking, according to an internal memo. Mato also retains his role and title as head of global capital markets-Americas. The shop is billing the move as a “further step in HSBC’s execution of its emerging markets-led and financing-focused strategy.”
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Mexican Energy Reform Proposal May Boost Bonds
The energy reform proposal sent to the Mexican congress by president Felipe Calderon is an important first step to improving the country’s oil sector, Fitch’s senior director of foreign ratings Shelly Shetty tells LatinFinance. “We’ve seen a decline in production levels in Mexico and clearly a reform is needed to maintain and boost both investment and production levels in the oil sector,” she says. But this is not an optimal reform, Shetty says, since it does not permit full scale private sector participation. “However, it does allow for greater financial and budgetary flexibility for Pemex, and allows for enhanced corporate governance which should help the company to increase investment in the sector,” the analyst states. If the reform were to pass, it would have a pretty important symbolic importance, given the continuous opposition in Mexico to allowing any form of private participation in the oil sector. “One has to monitor the political debate,” Shetty says. Impact on Pemex and sovereign bonds will depend on how far the proposal advances in congress, says Alfredo Coutino, senior economist for LatAm at Moody’s Economy.com. “If there is a lot of resistance, we will not see a positive answer in the bonds and in the ratings of the country and the company,” Coutino says. However, if the reform is approved even with modifications, bonds will receive a positive boost. “In the medium to long term the answer will be positive for the bonds,” he adds.
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Moody’s Upgrades Paraguay to B3
Moody’s has upgraded Paraguay’ foreign and local currency bond to B3 from Caa1, the foreign currency bond ceiling to B2 from B3, the foreign currency deposit ceiling to B3 from Caa2, and the local currency deposit ceiling to Ba2 from Ba3. Only the local currency bond ceiling was unaffected, at Ba1. The outlook on all is stable. The upgrade comes in light of the reduction of debt vulnerabilities thanks to higher export prices and fiscal surpluses recorded in each of the last 4 years. “Paraguay’s economy has benefitted from the ongoing commodity price boom and the government’s moderate policy stance, helping to reduce domestic and foreign debt concerns,” Moody’s says. “Still, Paraguay remains vulnerable to external shocks.” Paraguay is planning to return to the international debt markets in 2009, according to Cesar Barreto Otazu, the country’s minister of finance. The country is currently implementing measures to improve the country’s rating and overall fiscal scenario, the minister told LatinFinance in a recent interview.
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Telemar Advances Debenture Plan
Shareholders of Brazil’s Telemar have approved the sale of BRL1.61bn in debentures, according to the regulator. The notes will be sold in a BRL1.15bn first series followed by a BRL460m second series. Telemar did not state the expected tenors. Proceeds will repay short term debt obtained last year.
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Copasa Aims for BNDES Funds
Brazilian water utility Companhia de Saneamento de Minas Gerais is looking to obtain a BRL578.2m loan from the BNDES development bank. The plan is subject to the approval of shareholders April 24. Copasa plans to use proceeds for 2008 operations.
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CBD Readies Private Share Issue
Brazilian grocer Companhia Brasileira de Distribuicao is to raise BRL273m through a private share sale, it said. The parent of the Pao de Acucar chain of stores plans to issue 7.7m preferred shares priced at BRL35.46, using proceeds to pay down debt.
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Vene Nationalizes Argentine -Controlled Steel Maker
Ternium’s CFO Pablo Brizzio was heard to be travelling to Venezuela Wednesday afternoon, following the announcement of the nationalization of steel maker Sidor, in which Ternium has a 60% stake. The announcement was made by Venezuelan vice president Ramon Carrizales in the wake of a labor dispute between Sidor and its workers, according to the state-controlled news agency. Sidor was privatized 10 years ago and besides Ternium, partners include the Venezuelan government which owns 20% and current and former employees of Sidor, which own 20% as well, according to Ternium. The move comes just days after the announcement of the cement industry in Venezuela made by president Chavez. The government’s main reason for nationalizing both the cement and steel industries is that they are indirectly responsible for the severe housing shortage, says Goldman Sachs. “Hence, this should be seen against a background of gradual move to a command economy as the government is gradually encroaching on private sector activity, oftentimes invoking a higher moral ground.”
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Metrofinanciera Preps MXP2.5bn Issue
Metrofinanciera is preparing to sell MXP2.5bn in 6-year bonds backed by construction bridge loans this month. The floating-rate offering denominated in UDIs or pesos will include an A tranche and a subordinated B tranche, the proportions of which have not been determined. Ixe is managing the sale.
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EDC to Buy Back $246.8m in Bonds
Electricidad de Caracas plans to repurchase $246.8m in 10.25% 2014 notes, following the expiry of its tender offer, it said. The amount represents 94.94% of the outstanding amount. The company has not stated how it will fund the repurchase. ABN AMRO was dealer-manger.