Manuel Medina Mora will continue to lead Citi’s Mexico and Latin America operations following a comprehensive global reshuffle. According to Citi CEO Vikram Pandit, the reorganization will allow the bank to focus resources on growth in emerging and developed markets and improve efficiencies. “Citi has established a regional structure to bring decision-making closer to clients. It is empowering the leaders of the geographic regions with the authority to make decisions on the ground,” says the bank, which is under pressure after significant mortgage-related losses. Medina will report directly to Pandit, as will the heads of the following units: Asia Pacific, including Japan; Western Europe, Middle East and Africa; and Central and Eastern Europe. Citi has also reorganized its consumer group into two global businesses – consumer banking and global cards. It will also further centralize global functions, including finance, IT, legal, human resources, and branding.
Yearly Archives: 2008
LatAm Macro Resilience Limited: BCP
LatAm can sustain deterioration in external conditions, but only for a limited time, says BCP. “After preaching the merits of orthodoxy to emerging market governments for decades, the US is introducing heterodox policies that would make the IMF blanche,” says the shop. “The net effect of the new measures is the erosion of investor confidence and the deleveraging of the global financial system,” it adds, saying that the prospects of decoupling are zero, given the immense size of the US economy. Among LatAm positives are the fact that debt levels as a percentage of GDP are half of what they were a decade ago. In addition, international reserves by the end of 2008 will be twice the 2005 level, while regional current account balances will remain in the black through 2008, despite a decline in commodities. The region will have no major elections in 2008, and the election cycle will not commence until 2010. BCP’s top recommendations are Peru and Mexico. It is neutral Argentina, Brazil and Chile, and underweight Venezuela, Ecuador and Colombia.
Peru Leads Investment Grade Race: Citi
Peru seems likely to hit investment grade first, followed by Brazil, while Colombia still has a way to go before being upgraded, according to Citi. However, the credit crunch is likely to delay the elevation to investment grade of the three, the shop say, citing presentations by S&P and Fitch. In order to be upgraded, Peru must cut net external public debt and continue diversifying its economy and in particular, exports. A reduction in poverty and the strengthening of public institutions is also required. Fitch says challenges facing Brazil before it can become investment grade include demonstrating an increasing resilience to general market turmoil, sustained improvement in investment rates, higher economic growth, improving the external debt and solvency ratios and showing progress with structural reforms. Colombia faces the highest hurdle to reaching high grade, according to Citi, citing S&P and Fitch. Colombia’s macroeconomic estimates for 2008 are close to or worse than the BBB median with the exception of the 5-year GDP growth rate.
Moody’s Mulls Independencia Upgrade
Moody’s has put the B3 local currency corporate family rating and the B3 foreign currency senior unsecured rating of Independencia on review for possible upgrade. “The review of Independencia’s B3 ratings reflects primarily the successful reduction of its susceptibility to a trade embargo from importing countries due to animal disease by expanding the number of slaughterhouses from five to 12 and slaughter operations from three to seven states, both by the end of 2008 and compared to when Moody’s first assigned the ratings,” says Moody’s analyst Soummo Mukherjee. The review will consider the company’s longer-term growth and financial strategy and the expected cushion it is likely to maintain with a net debt/Ebitda financial covenant in its $225m bond due 9.875% of 2017 that steps-down from 4.25x to 4.00x at the end of 2008, to 3.75x at the end of 2009 and to 3.50x at the end of 2010.
Moody Rates Mexico Auto Loan Trust Debt
Moody’s has assigned a global scale, local currency rating of Baa1 and a rating of Aaa on its local scale to the class A-1 and class A-2 certificates of the Mexico Auto Loan Trust, Deutsche Bank Irrevocable Trust F/781 that were issued by Deutsche Mexico acting solely in its capacity as trustee. The agency also rates the Class B certificates of the same offering as Ba2 and A2 locally. “Interest and principal to certificate holders will be primarily payable with cash flow from vehicle loan contracts originated by the Mexican financial arm of a car manufacturer and assigned to the trust, which was established under the laws of Mexico,” the agency says. “The ratings are based upon the credit quality of the pool, and credit enhancement in the form of subordination, overcollateralization, a reserve fund, and a yield supplement account.”
Ecuador Sues Colombia Over Spraying
Ecuador has filed suit at the International Court of Justice (ICJ) in The Hague against Colombia, in an effort to stop or restrict aerial anti-coca spraying which has allegedly sickened people on the Ecuadorian side of the border and harmed livestock, farmland, and sensitive, ecologically diverse jungle areas. The suit follows last month’s diplomatic crisis between Colombia, Venezuela and Ecuador that subsided with little lasting damage. Ecuador is represented by Paul S. Reichler, partner at law firm Foley Hoag. “Fumigations conducted by the government of Colombia constitute a grave violation of the sovereignty of Ecuador and of the most basic principles of international law,” says Ecuadorian foreign minister Maria Isabel Salvador. Ecuador seeks an order that Colombia pay reparations to Ecuador for damage caused by the spraying. Around 4% of Colombian exports go to Ecuador, including roughly 10% of manufacturing exports. Reichler is also counsel in three other current cases before the ICJ. He represents Uruguay in a dispute with Argentina concerning the River Uruguay, which forms part of their joint border. He also represents Nicaragua in separate disputes with Colombia, over maritime borders, and with Costa Rica, over navigation rights on the San Juan River.
MercadoLibre Scraps Follow-On as Stock Sinks
MercadoLibre has abandoned plans to sell a block of shares worth up to $292m. The Argentine online trading platform withdrew the offering through a filing with the SEC yesterday without giving much detail. Executives close to the process say the company’s investors decided the deal, which was largely planned as a liquidity event for MercadoLibre’s long-term stockholders, would not make sense at the current market. Since January, the stock is down 46%. Among the company’s main shareholders are private equity firms Hicks Muse Tate & Furst, General Atlantic and Tiger Global as well as online auction company Ebay. “The [selling shareholders] chose to wait until after the company announced their quarterly earnings, which were strong,” says a banker close to the process, referring to a March 7 announcement that included a rise in quarterly revenue of 74%, albeit to a measly $27m. “The fact they pulled this deal is largely a market driven choice based on the trading price,” says a banker away from the transaction. JPMorgan and Merrill Lynch were slated to lead the offering, which may still come back later in 2008.
Cemex Sheds Axtel Shares for $257m
Cemex has sold most of its stake in Mexican telecom Axtel, netting $257m. The 119m shares represent 9.5% of Axtel’s total equity capital and 90% of the stake the cement producer held in Axtel as part of a long-term investment strategy. CFO Rodrigo Trevino says proceeds will be used to repay debt, and that the forward contracts used in the transaction will allow Cemex to benefit from future appreciation in the shares. Separately, Cemex is preparing to sell MXP3bn in peso-denominated bonds this month.
Posadas Set for Bond Pricing
Mexico’s Grupo Posadas is expected to sell up to MXP3bn in 2018 fixed and 2013 floating-rate notes today. Proceeds from the mxA/mxA+ transaction will help fund a repurchase of up to $225m in 8.75% 2011 bonds. Separately, the hotel operator has received the consent of a majority of the issue’s holders at the time of its early consent date. The offer launched March 17 pays $1,035 per $1,000, and expires April 11. Holders tendering before March 28 received $1,050 per $1,000. Credit Suisse is dealer manager on the tender and also managing the debt sale.
The 8th Euromoney/LatinFinance Caribbean Investment Forum
Since 2001, the Caribbean Investment Forum’s reputation and audience have grown year on year and it is now the most important annual forum for financial and business leaders in the Caribbean to meet and discuss the strategic agenda for this growing region. Since the Forum began, it has been making a strong case for the Caribbean to be seen as an attractive and profitable investment destination. Alongside this promotional objective, the Forum has been instrumental in influencing regional and global opinion on the viability of the CSME, the unique nature of Caribbean economies and the strategic importance of the Caribbean to the wider world.