Panama’s Banco General is expected to agree to a new $100m two tranche facility as early as today, according to bankers close to the borrower. The financial institution, which acquired Banco Continental last year, is seeking to refinance a loan of equal amount with a 2-year piece at 37.5bp over Libor and a 3-year portion at 45bp over Libor that comes due this year. Bankers expect pricing on a new facility to come in at twice those levels, thanks to rising margins across the board. LatAm pricing has moved up significantly in the past 8 months, catching borrowers off guard as they come to market to refinance or take out new facilities for trade purposes, working capital and acquisitions. The BBB rated bank took out the first $100m facility in 2006 for working capital.
Yearly Archives: 2008
Renewable Energy Startup Targets BRL300m
BioClean Energy, a startup in the biofuels sector in Brazil, is looking to raise up to BRL300m to begin operations this year, Richard Lark, a board member of the company and a principal at private equity firm Endurance Partners, which backs the new company, tells LatinFinance. Lark, better known as the CFO of low-cost airline Gol, says the company is looking to set up two mill complexes, a process which costs about $70m per mill. The capital raise is expected to take place in the coming months. BioClean is among the many early stage companies in the renewable energy, sugar and ethanol sectors seeking private capital for funds. Among the better known private companies are Brenco, backed by US-based firm Yucaipa as well as several wealthy individuals; and CNAA, run by managers of SantelisaVale and backed by Carlyle Riverstone and Global Foods.
Brazil Exchanges Seen Merging Quickly
The merger between the Bovespa and the BM&F will be finalized by the end of June, setting the stage for a push into other LatAm markets, Manoel Felix Cintra Neto, the BM&F’s chairman, tells LatinFinance. The executive attributes the rapid integration process to deliberate preparations for the deal on both sides, prior to formal announcement of discussions. “We want to create a center for the liquidity in the region,” says Cintra, adding the idea is to compete on a global scale with other exchanges, such as the US, where a number of liquid LatAm companies are listed. Cintra avoids formulating the expansion as an acquisition spree, though the idea is by no means far fetched, given how other global exchanges have used mergers to gain scale and volume. The merged bourse will be the second largest in the Americas and the third largest in the world, beating the NYSE and Nasdaq in terms of market capitalization, according to Economatica. “We want companies to list themselves in several different places in the region,” says Cintra, noting investors in Chile and Mexico are interested in companies and derivatives products in Brazil, while Brazilian investors would like to invest directly in commodities and companies elsewhere.
Peru Advances $2bn Electricity Project
The Electropampas/Pampas Verdes hydroelectric and irrigation project in Ayacucho, Peru is heard moving ahead with $2bn in project financing. “This is going to be one of the most important projects for Peru going forward,” Carlos Penny, president of financial advisor to the project, Pennynvest, tells LatinFinance. Long term financing should be in place over the next 16 months, he adds. “We are going to be working with the multilateral agencies, we have spoken to CAF – they are very interested,” says Penny, adding that the project managers are also talking to the IFC, IDB, OPIC and MIGA. “All these entities have been formally contacted and we have had conversations with some of the large international banks, particularly European,” says Penny. The four hydro plants will generate a combined 1,200MW and accumulate 1bn cubic meters of water. The project has been studied over the last 8 years by Switzerland’s Electrowatt. It has four sponsors: one Peruvian, one UK and two Swiss, and there are discussions to involve a major international electricity group. Penny declined to identify the parties involved. The project will take four years to build. Penny does not anticipate environmental issues since the areas to be irrigated are unpopulated. It will include a 36km tunnel connecting two lagoons, he adds. Given how long this project has been in the works, locals have been skeptical that it will see the light of day.
LatinFinance – Awards for 20 Years of Excellence (1)
Sovereign Issuer: Mexico
Investment Bank: Credit Suisse
Retail Bank: Itau
Debt Deal: Creation of Brady Bonds
Equity Deal: Bovespa Holding IPO
M&A Deal: Vale-Inco
Structured Finance Deal: Nikkei Remittance Trust 2001 (Merrill)
Law Firm: Cleary Gottlieb
LatinFinancier
Sell side Jose Olympio (CS)
Lawyer Mark Walker
Lifetime achievement Bill Rhodes (Citi)
S&P Raises Brazil’s Sul America (1)
S&P has upgraded the ratings of Brazilian Insurance Provider Sul America to B+ from B, it said, and the ratings of its Sul America Companhia Nacional de Seguros unit to BB from BB-. “The rating action reflects the a significant reduction in leverage of the holding company and the improvement of its capital structure following its BRL775m November IPO,” it said. The outlook is positive.
IDB Miami – Social Diary
Sunday April 6
6.00-9.00pm HSBC Cocktail Reception. Casa Casuarina, 1116 Ocean Drive, South Beach
6.00-8.00pm BCP Securities Cocktail. Marinheiro Restaurant, 1155 Brickell Bay Drive
Drop in Remittances Could Hurt Mexico (1)
The Mexican economy could be severely impacted should remittances from abroad, currently flat, start to decrease, according to Donald Terry, manager of the multilateral investment fund of the IDB. “After oil, remittances are the No. 2 source of capital going into the country,” Terry tells LatinFinance. Currently 5-6 million families, already on the lower end of the social scale, depend on the money sent from abroad. “You’ll see poverty levels increase in Mexico,” Terry says. A drop in remittances to Brazil is actually a good sign, according to Terry, as more Brazilians stay home or return from abroad because of better economic conditions at home and the appreciation of the BRL. Overall, the panorama for remittances to LatAm remains stable, Terry states. “I don’t think remittances are going down. They are flat. But they are not increasing either,” he says.
LatAm in the Eye of the Storm: Brady (1)
Latin America cannot escape the storm ripping through developed markets unscathed, warns Nicholas Brady, former US treasury secretary. “What is happening in this country can’t help but affect Latin America’s future,” says Brady in a speech at the LatinFinance 20th Anniversary Gala Dinner & Awards Ceremony in Miami Saturday night. “Because we operate in an increasingly global economy, it’s impossible for Latin America to avoid some collateral damage from our present malaise,” he adds. Brady compared the current US economic duress to the major systemic crisis the economy faced two decades ago when he was treasury secretary. “In 1989 and ‘90 remedial steps were called for, and we took them. And today with a banking system that faces systemic predicaments and an economy that may be on the brink of the deepest recession in a generation, that’s where we are again,” Brady says. However, he notes, while two decades ago it was possible to identify the borrowers and lenders, as well as their capacity, now it is not. “I’d recommend that we do what we did with the commission that President Reagan asked me to chair after the stock market crash in 1987 – namely to identify the market participants, describe the actions they took, figure out the weaknesses in the system, and put forward a solution,” Brady says. He adds that the process of de-leveraging and re-pricing will take time, but adds that a great deal of the success in the ’89-’90 timeframe came from prompt action. The official also warned against over regulating in response.
LatAm Banks Pick up the Slack: Brady (1)
While the availability of debt financing to LatAm from international sources has slowed, the region’s banks have picked up much of the slack, according to Nicholas Brady, former US Treasury Secretary. He adds that emerging markets are an important part of global resilience thanks to a combination of better policies and stronger economic performance. “Mexico will likely be the most affected by a slowdown in the US since approximately 90% of Mexico’s exports go to the US,” says Brady. “And if commodity prices go into a steep decline, this will affect those countries more dependent on commodities for economic growth, such as Brazil, Argentina, Peru, and Chile,” he adds. In addition, LatAm has no subprime mortgages, and the region’s banks stopped short of engaging in highly structured, over-leveraged deals. “Banking system reforms led to solid local banks driving credit expansion, but with better asset quality than that of the United States,” adds the official. One of Brady’s firm, Darby’s, portfolio companies in Colombia, which is seeking financing, received multiple offers from international banks nine months ago. While those banks have withdrawn their offers, the gap has been filled by Colombian banks that have committed to complete the transaction, he adds.