LatAm equity funds soared 5.78% in the week ending April 3, taking it to a net 1.79% rise year-to-date, according to Lipper. China region funds were the biggest gainers of the week with 6.97%, while EM funds rose 3.28%. After China, the next big performer was real estate funds, gaining 6.30%. Overall, most world equity funds reported gains, with a combined rise of 3.22% for the week, according to Lipper. EM debt funds meanwhile returned 0.48% in the week ended April 3, according to Lipper. International income funds experienced the biggest drop with 1.11%, while global income funds lost 0.67%. High yield funds made 0.67%, the biggest climb of the week.
Yearly Archives: 2008
Posted inDaily Brief
Cemex Shares Sink on Chavez Seizure
Shares in Mexican cement giant Cemex sank Friday following the announcement that Chavez is nationalizing the cement industry in Venezuela, where Cemex has significant presence. Cemex’s ADR traded at $26.32 late Friday afternoon, down 4.22% from Thursday’s close of $27.48. On the Bolsa, Cemex was trading late afternoon at MXP27.81, down 3.94%. The Mexican IPC index was meanwhile off just 0.46%. The Venezuelan president says that he will pay “whatever it takes” to gain control of the cement industry in the country, according to press reports. Cemex was expecting for clarification from the Venezuelan authorities Friday. “We have not been informed of this by the Venezuelan government,” says a Cemex spokesman. “Given that, we are asking for an explanation.” The government blames cement companies for the domestic housing crisis, accusing them of exporting rather than supplying the domestic market, notes Goldman Sachs. The shop adds that the government has also in the past made threatening remarks about the steel and banking industries.
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Cecosud Plans Equity Issue
Chilean retailer Cencosud plans to ask shareholders to approve a capital increase worth about $170m. The increase will go to a vote April 25, and would involve issuing 40m new shares. Cencosud stock traded between CLP1,820 ($4.18) and CLP1,910 ($4.39) this week.
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OMA Approves Stock Repurchase
The board of Mexico’s Grupo Aeroportuario del Centro Norte (OMA) has approved a MXP300m share repurchase. The total adds to a MXP1bn amount authorized for share repurchases last year. It is unclear how the repurchase will be funded.
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Citi Leads ECM Tables
In a year where the thin trickle of ECM flow has been characterized by exceptional cases rather than the usual IPO and follow-on issuers, Citi, which finished in fourth place in 2007, is leading the ECM league tables with three deals and 30.16% of the underwritten deal volume, according to Dealogic. While that dominance is not expected to last very long, it indicates the shop has been busy printing deals to address a gaping hole in its 2007 LatAm franchise. Citi helped bring GP Investments’ $213m follow-on in February alongside Credit Suisse. It then underwrote its parent company’s divestiture of a stake in Brazil’s Redecard in mid-March, while its co-investors in the company chose not to sell. At $724m, that secondary offering is the largest deal to date. And a week later Citi helped Cresud raise $289m in a local rights offering in Argentina. Citi is also slated as co-lead on a $533m deal for Hypermarcas, alongside Merrill. “I don’t think they’ll still be there at the end of the first half,” says an ECM banker at a competing shop. “It’s all a question of when the market comes back,” he adds, noting once that happens, the usual suspects should regain their lead. Last year Credit Suisse and UBS Pactual led the charge by a wide margin, collecting 25% and 18% of the ECM fee pool respectively, according to Dealogic. But it may be awhile before those two regain their 2007 lead positions. A $2bn Gerdau offering scheduled for the last week of April should place JPMorgan and Itau, two other outliers, firmly at the top, with $1bn each in underwriting volume.
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Klabin Segall to Sell Local Bonds
Brazil real-estate developer Klabin Segall says it plans to issue BRL220m in 2013 debentures. The notes will pay 200bp over the DI rate, an investor relations official tells LatinFinance, and the total sale could reach BRL250m once the process begins. Proceeds will go towards working capital. Itau is managing the sale.
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Dark Cloud Hangs Over IDB Meetings
LatAm is in its best ever fundamental shape to withstand bearish pressure overhanging from wobbly developed world markets. But as IDB annual meetings get underway in Miami, the hostile external environment – how bad it will get and what impact it will have on EM – is top of the agenda. LatAm reserves are at all time highs, debt is rapidly being paid down, there is greater commitment to responsible fiscal and monetary policy and increasing evidence that countries can maintain stability through a whole cycle, rather than just the upswing. And locals remain fairly bullish. But those who assume the global turmoil will not dent LatAm are whistling past the graveyard. “People are concerned, you can feel the anxiety,” says a veteran LatAm debt banker. “Overall it’s going to be a hard year for everyone, there’s no doubt,” he adds. According to Larry Summers, Charles W. Eliot professor at the Harvard University Kennedy School, the US recession is different to the standard inventory recession, making it more likely to be protracted. “It’s appropriate I think to be quite concerned,” Summers tells LatinFinance, referring to the US economy. “We haven’t seen a comparable situation in a long time and I think there’s the possibility that it could get worse,” he adds.
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Dominican Challenges Lie Ahead: BCP
A new Fernandez administration in the Dominican Republic will have to deal with the ricochets of the US housing sector crisis, says BCP Securities. “Tourism will decline,” BCP says, “as North American households are forced to curb their spending.” Furthermore, the effects of the credit crunch could lead the DR into recession. “President Fernandez may sweep the election in May, but he is not going to enjoy the favorable external winds that propelled his administration during the last four years,” BCP states. During his current term, Fernandez has managed to stabilize the DOP, bringing inflation down to 6.5% year-on-year in 2008 versus 28.7% y-o-y in 2004. He also improved tax collection and brought order to the state-owned companies, thus reducing the fiscal deficit, says BCP. In 2008, the DR posted a primary surplus of 1.7% of GDP versus a deficit of 1.5% in 2004, BCP says. DR president Fernandez looks likely to stay in the presidency after the May 16 elections, with a current lead of over 24 points over his closest rival, according to BCP.
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Moody’s Rates Brazil’s ABnote Debt
Moody’s assigned a Aa3 local Brazilian rating and a Ba2 local currency rating to the BRL165m senior unsecured debentures due 2013 to be issued by Brazilian plastic cards and ID system manufacturer and printer American Banknote (ABnote) in the local market. The outlook is stable. Proceeds from the debentures, expected to be received in April 2008, will be used to finance the acquisition of Interprint, one of ABnote’s largest competitors.
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Mexican Economy to Grow in 2008: CS
Despite the economic crisis in the US, the Mexican economy will experience moderate expansion in 2008, according to Credit Suisse, forecasting growth at an average annual rate of 2.4% in 2008, down from 3.3% in 2007. The Mexican government reported that the monthly GDP proxy rose 4.2% year-on-year in real terms in January and 0.9% relative to December (non-annualized), after adjustments, says the shop. “These were surprisingly strong figures, considering that real GDP growth averaged 3.3% in 2007,” CS says. The available data for early 2008 supports the thesis that the Mexican economy is more resilient than in the past. “It’s still early, but so far, so good,” the shop says.