Fitch has affirmed the City of Buenos Aires with a stable outlook. The agency leaves the ratings of the city’s euro medium-term note program and long-term foreign and local currency at B. The ratings, says Fitch, reflect strengths in the city’s credit profile, including its large and diversified economy, an adequate liquidity position, sustainable debt levels and manageable debt-service repayment schedule. Also reflected is the city’s financial flexibility which is due to a majority portion of its total expenditure being financed with local sources (88%), as opposed to only 12% representing federal transfers. Eduardo D’Orazio, an analyst at Fitch, says the city is making sound decisions regarding its debt. Since restructuring in 2002, the city has met debt obligations in a timely fashion, notably during 2006 and 2007, when the highest levels of amortization occurred. This is reflected in a recent improvement in debt ratios. As of May 2008, only two series out of five originally issued are outstanding. One of the series outstanding is due in 2009 and the second in 2011. Together, they total $267m in debt, says D’Orazio. “The city was about to issue $500m in debt for public works, but decided to postpone it due to the global financial crisis, which I think is a good decision,” he adds.
Yearly Archives: 2008
Brazil Inflation Slowing
As inflation slows in Brazil, economists expect the central bank to start easing rates in January 2009. “December’s IPCA-15 came in at 0.29%, well below our forecast of 0.40% and median market consensus of 0.43%,” says UBS Pactual, which expects headline inflation to stay at around 0.30%, bringing the 12-month figure to just below 6.00% by the end of 2008. Barclays, meanwhile, says that that the domestic supply-demand imbalance may no longer pose an inflation threat near term, and that global disinflationary forces should help contain domestic inflation. They place inflation at 4.50% in 2009. The economists add that they expect the central bank to start an easing cycle in January with a 50bp cut. The Selic stands at 13.75%.
IDB Lends $75m to Noble Argentina
The IDB has approved a loan of up to $75m to Noble Argentina so it can build a soybean crushing plant in Santa Fe province. “The IDB financing will help Argentina cement its position as a major player in the international market for soybean byproducts, as the new plant could generate more than $640m a year in exports,” says IDB project team leader Martin Duhart. Separately, the IDB says it will double its annual grants to Haiti to $100m in 2009. The multilateral gave the country $50m in grants in 2007 and 2008. The funds will go to investments in social and economic programs.
Fitch Chops Cap Cana Rating
Fitch has downgraded the rating on Cap Cana’s $250m senior secured notes due 2013 to CC/RR4 from CCC/RR4 and keeps them on watch negative following an announcement of an expected restructuring of the bonds. Cap Cana is offering three different restructuring alternatives: an offer to repurchase up to $100m at 33.4 cents plus accrued interest; an exchanged note with an expected 2-year maturity extension along with an increased collateral package and an increased coupon; or an exchange for certificates of a liquidating trust where holders will be repaid through the sale of certain Cap Cana properties. Cap Cana is a 30,000 acre luxury, second-home real estate project under development and is located on the easternmost tip of the Dominican Republic.
Moody’s Puts Rede on Negative Review
Moody’s has put Brazil’s Rede Energia on review for possible downgrade. The agency says it is concerned about the company’s ability to refinance short-term debt and a capex program in a timely manner given adverse conditions in capital markets. Long term, says Moody’s, it appears that further equity capitalization will be critical, given the group’s increased leverage and higher cost of capital. The ratings placed on review are the B2 global scale and Ba1.br national scale corporate family ratings and the B3 global scale rating on Rede’s $575m perpetuals.
Moody’s Sees CAF Resilience to Ecuador
Moody’s sees resilience at CAF, despite exposure to Ecuador, which has defaulted. “The recent and historical experience, both in Ecuador and other CAF member countries, supports the view that CAF is unlikely to be caught up in any government default,” said Moody’s VP Gabriel Torres. The agency cites comments from the president suggesting it will pay back many of its loans despite the default. Correa also apparently wants to seek new financing from multilateral lenders, including CAF. Ecuador is one of CAF’s biggest borrowers, and S&P last week changed its outlook to negative on the multilateral because of exposure to the sovereign. “While the government stance could change in the future we see no evidence of such change today,” says Torres. CAF’s status as lender of last resort in times of crisis continues to support its A1 rating, despite the low ratings of its member countries, adds the analyst. “Ecuador, and other member nations, have repeatedly shown throughout CAF’s history that they place debt payable to CAF as senior to almost all its other external obligations,” says Torres, adding that examples are numerous and span several major crises. Ecuador made a $7.35m payment to CAF Monday for a social investment loan, says Dow Jones, which cites a presidential palace statement.
GDF Suez Chile Division Gets $393m Loan
GDF Suez Andino, the Chilean subsidiary of GDF Suez, has obtained a $393m A/B project loan from the IFC and commercial banks Calyon and Fortis to finance the construction of the Central Termoelectrica Andina power station. The loan, says GDF, will consist of two tranches. The first from the IFC is for $100m and the second, from commercial banks, is for $293m. The loan has an amortization period of 17 years and a balloon payment of 25%, the company says.
Banorte to Sell MXP2.5bn
Banorte has notified the Bolsa de Valores that it intends to sell up to MXP2.5bn in subordinated debt next year. The bank says the issuance is part of a 5-year program worth MXP15bn from which it sold MXN 2.75bn in 10-year bonds in June and another MXN5bn in March.
ACP Awards Third Excavation Contract
The Panama Canal Authority has awarded a third excavation contract to Costa Rica-based Constructora Meco, which submitted the winning bid of $36.7m. The excavations will help create an access channel linking the new Pacific locks with the existing Gaillard Cut. An ACP spokeswoman says the entity will use its own cash to finance the project and not the $2.3bn in financing it recently obtained from multilateral banks. The other five companies that presented bids are Cilsa Mineria Maria, which bid $74.7m, Conalvias-Retraneq with $61.3m, Constructora Santa Fe, which bid $46.0m, Corporacion M&S, which bid $45.2m and Constructora Urbana, which bid $38.2m. A fourth and last excavation contract will be awarded in July, says the spokeswoman, adding that bidding will begin in February.
WBank Loans $120m to State of Acre, Brazil
The World Bank has approved a $120m loan to the Brazilian state of Acre to help provide basic services and promote development based on the state’s natural resource base. The 28-year loan is guaranteed by the government of Brazil and has a 7-year grace period. Acre has the third smallest economy among Brazil’s states, based on extractive and forestry activities. Its per capita income of $2,810 is the 10th lowest in the country. Despite significant recent improvements, many of the state’s social and economic indicators are well below Amazon and Brazilian averages, says the Bank.