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.
Yearly Archives: 2008
Posted inDaily Brief
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.
Posted inDaily Brief
Fitch Affirms Brazil’s ISA, Chile’s LAN
Fitch has affirmed ISA Capital do Brasil foreign and local currency issuer default ratings at BB (stable). The rating action applies to $554m in outstanding senior secured notes. Ratings are based on the strong credit quality of CTEEP, its sole revenue source and only operating asset. “Although CTEEP’s credit quality is strong, ISA Capital’s credit quality is somewhat weaker given that ISA only owns 37.5% of CTEEP total capital and does not receive the full benefits of operating cash flow,” the agency says. Going forward, ISA Capital is expected to increase its cash reserves by approximately BRL100m per year during the next four years in order to cover the amortization of the notes due 2012. Fitch also affirmed the foreign currency issuer default rating (IDR) of Chile’s LAN Airlines at BBB. The agency also affirms LAN’s $40m ticket receivables series 2002 due 2009 at BBB. The outlook on all is stable. The action reflects a strong business position, low cost structure, fleet flexibility and adequate financial profile of the airline, the agency says.
Posted inDaily Brief
Cosan Postpones Share Swap
Cosan has asked the CVM to approve postponement of a planned share exchange to May 12 due to poor market conditions. The purpose of the transaction is to have holders of Cosan SA, the Bovespa-listed entity that went public in 2005, migrate to Cosan Ltd., the newer NYSE-listed entity whose voting stock is largely held by the company’s founder Rubens Ometto Mello. Investors have until May 2 to choose to adhere or not to the exchange offer. Cosan says in a statement that its shareholders requested a postponement due to volatility in the markets.
Posted inDaily Brief
ING Warns of Forced Sales After EM Exodus
ING warns that EM debt markets might be in store for forced asset sales after the latest fund flows data revealed some disturbing developments. The most recent mutual fund investor data for the week ended April 2 shows a net outflow of $177m (0.25% AUM) from EM debt funds, versus a $64m outflow in the prior week. “More troubling was the $66m (0.10% AUM) outflow recorded from local funds,” says the shop. EM fund managers mostly sit on comfortable cash positions and are seeing a high level of amortizations and coupon interest income. But further weakness in key EM currencies, along with heightened RV allure of core debt markets, may attract money from dollar-based EM funds as well as further investor hedging away from US dollar-denominated securities, says ING. “EM is now facing the threat of negative technical pressures building internally,” says the shop. “The persistent outflows seen from crossover HY vehicles may pose a threat if managers are forced to sell out of liquid EM positions in order to meet redemption requirements.” ING cites flows data from EPFR Global and JPMorgan.
Posted inDaily Brief
LatAm Maturities Spike Coming: Moody’s.
LatAm non-financial corporate issuers face a big spike in maturities in the second half of the year which will test investor appetite, according to Moody’s. “While the amount of debt coming due in the first half of 2008 is low by any standard, the first big refunding test will come in the second half of 2008, when maturities increase nearly threefold,” says Alexander Carpenter, Moody’s chief credit officer for LatAm. The $21bn of corporate debt coming due in LatAm through 2009 normally would not raise concerns about companies’ ability to refinance, notes Carpenter. “However, market conditions have been far from ordinary in recent months,” he says. The agency doesn’t expect a significant increase in the risk of covenant violations because most LatAm corporate results have remained in line with expectations. “Hence, debt maturities should be the main area of focus for liquidity risk in the region,” Moody’ says.
Posted inDaily Brief
Argentina Sells ARP867m in Bonars
Argentina placed ARP867m ($274.6m) in 2013 bonds paying interest at 350bp over the Badlar rate, according to the economy ministry. Demand for the Bonars reached ARP1.827bn in the auction closed yesterday. The government was looking to sell ARP700m-ARP1bn in new bonds. With the Badlar for the first interest period set at 8.51%, the government said the initial payment will be 12.01%. The transaction was self-managed.
Posted inDaily Brief
Mexico Warrant Sale Sees Strong Demand
Mexico’s sale of $1.25bn in notional value of warrants was well bid Thursday, highlighting robust investor interest in rotating from legacy hard currency paper into domestic debt. The transaction, which continues Mexico’s ongoing liability strategy, gives the option to exchange UMS bonds denominated in foreign currency for domestic notes. Warrants with a notional value totaling $1bn allow investors to swap 21 series of USD, EUR, Deutsche Mark and Italian Lire denominated notes for 2014, 2017 and 2036 Mbonos priced at $23.00 each, versus a $17.50 minimum. The second series, totaling $250m and swapping the same 21 series for 2017 and 2035 bonds denominated in UDIs – the first time UMS has offered the inflation-linked unit in a warrant deal – priced at $19, versus a $10 minimum. Demand reached $3.2bn for the first series and $962m for the second. The price was lower than the estimates given before the sale, such as $48 and $41 expected by Lehman. However, more important than the price, notes a DCM banker away from the deal, was the oversubscription, as the value is in the exchange of foreign debt for domestic, rather than in cash collected in the sale of the warrants themselves. The exchange will occur October 9. Barclays and Merrill Lynch managed the transaction.
Posted inWeb Articles
Colombia: Investing in Growth
A breakfast panel discussion to debate the rapid evolution of the Colombian economy and financial markets, its pace, direction and significance. Divided into three broad sections the discussions will cover the real economy, financial services and capital markets exploring questions such as: What is needed to spur economic growth and financial markets innovation and how vulnerable is Colombia to external shocks? How can the already successful and/or tier II Colombian companies access local and international capital markets in the current environment and how is the market for structured finance likely to evolve in Colombia?
Posted inWeb Articles
The IDB Breakfast Meeting 2008
LatinFinance among the region’s leading banks, policy makers and companies gather during the IDB meetings for a breakfast meeting aimed at discussing political and economic issues in the region. For the past five years we have successfully hosted this event which is attended by global senior executives and focuses on an expert panel. In 2008 with the support of CAF, we will once again deliver a balanced and well-represented panel including: Luis Carranza, Minister of Finance & Economy, Peru; Oscar Ivan Zuluaga, Minister of Finance, Colombia & Dick McCormarck, Vice Chairman, Merrill Lynch