The IFC has made its first ever housing development investment by taking a 10.6% stake in Vinte, a Mexican low income housing developer, for $10m. The multilateral also lent Vinte $12.5m through a 7-year revolving credit line. “We originally started in this sector by helping Sofoles with capital market financings,” Marcos Brujis, IFC Senior Manager for Mexico and Central America, tells LatinFinance. “The next stage in our strategy is financing directly the construction sector, which involves a greater risk than our previous financings.” Vinte, a privately held company, caught the eye of the IFC for its environmentally and socially sustainable practices that include strict standards on use of neighborhood space, efficient water and energy usage technology and hi-tech communication facilities within the homes. The IFC seeks to provide financing to companies that lack access to the bank and capital markets.
Yearly Archives: 2008
D&S Denies Wal-Mart Talks
Chilean retail chain Distribucion y Servicios (D&S) has rejected reports that suggest it is holding merger talks with Wal-Mart. In a statement to the SVS, Chile’s regulator, D&S’s CEO Enrique Ostale Cambiaso says his company had not been in discussions with Wal-Mart, as local paper El Mercurio reported earlier in the day. An Itau report noted last month that the termination of talks between Falabella and D&S – thanks to an antitrust ruling – would pave the way for a resumption of other merger considerations in Chile’s highly competitive retail sector. “D&S may now look at La Polar and/or Ripley to increase exposure in non-food and credit,” said Itau in early February. “Conversely the possibility is now open for Wal-Mart, Casino or Carrefour to make a stab at D&S,” it adds.
Low Income Developer Gets Capital Injection
Camargo Correa Desenvolvimento Imobiliario (CCDI), a Bovespa-listed entity, has purchased 25.72% of its low income subsidiary HM Engenharia e Construcoes for BRL72.2m. HM will use the cash injection to boost its activity in purchasing and developing land for houses. HM has a land bank of BRL1bn. The deal, done through a share sale to CCDI, increased the parent’s stake in HM to 76.7%, and gave it an option to buy an additional 4.3% by April 30.
Microfinance Seen Expanding
Microfinance sector continues to grow in LatAm, according to Fernando Lucano, fund manager at Peru’s Cyrano Management, manager of the $265m Global Microfinance Facility fund. “In Peru there is more or less $2.5bn of financial market assets invested in microfinance,” says Lucano. “The size of the Peruvian financial system is between $18bn and $25bn, so there is 10% of assets in microfinance, and that will continue to grow,” he adds. The microfinance sector is growing by 30%-40% a year in Peru, Lucano states. “There is business for everybody: Investment banking, rating agencies, sophisticated investors,” he adds. But the growth and increasing of microfinance calls for a more sophisticated look at the sector, says Lucano, a panelist at a microfinance forum organized by Credit Suisse in New York.
Chile Retail Banks Seen Boosting Margins
Chilean banks continue to boost margins, according to Fitch, which notes a slowing on lending growth. Commercial loans to SMEs have become more relevant to Chilean banks’ total portfolios as the economy continues to grow, driving additional investment in the sector, the agency adds. “Margins in the industry continue to improve, fueled by a larger component of retail lending, higher leverage and the recent decrease in technical reserve requirements, which resulted in a reduced effective cost of funds,” says Carola Saldias, director in Fitch’s LatAm financial institutions group. Fitch believes the operating environment in 2008 will be more challenging for banks as a consequence of tighter liquidity, due to the reduction in financing from pension funds, lower spreads as a consequence of increased competition and the resulting increase in funding costs. It also predicts a reduction in profitability due to a less-favorable economic environment and high volatility in capital markets.
Moody’s Raises Amazonia-Telemig Notes
Moody’s has upgraded the foreign currency rating to Ba3 (positive) from B2 on a $120m senior unsecured notes issue due 2009 from Amazonia Celular and Telemig Celular. The action follows the approval by industry regulator Anatel of the acquisition of Amazonia by Telemar (Baa2, stable), and reflects Moody’s expectation that Amazonia will benefit from the stronger credit profile of its new controlling shareholder. The agency also notes considerable refinancing risk deriving from a relatively high amount of short term debt maturities at Amazonia.
Banco do Brasil Sells MT Notes
Banco do Brasil has privately placed $250m in 2014 bonds backed by future dollar cash flows generated by the bank’s electronic remittance business. The bonds issued from a $350m MT-103 program pay 55bp over Libor and are backed by Assured Guaranty. The issuer is Dollar Diversified Payment Rights Finance Company, a Cayman Island SPC established by Banco do Brasil, which also originates and acts as servicer for the receivables. Moody’s, which rates the offer Aaa, notes the financial and operational strength of Banco do Brasil, its fundamental importance to Brazil’s banking system and crucial role as a premier provider of trade finance. The agency notes the bank’s BRL357.7bn in assets as of December 2007 and capital of BRL24.2bn. The offer through BNP Paribas as bookrunner was Banco do Brasil’s first remittance securitization since 2003. Transactions of this type are typically done when borrowers find access to unsecured credit tough. The other major Brazilian banks are heard considering similar transactions that are set to price in the short term.
Chile to Debut 30-year Local Bond
Chile will offer a 30-year local bond as part of the $1.1bn equivalent in local debt it plans to issue this year, its finance ministry said. That would be the first domestic offering of that tenor, catching up with Mexico, which led the way in developing local market tenors. This year, Chile plans to issue $200m in 10-year peso-denominated bonds, UF10.2m ($460m) in notes denominated in the UF inflation-linked unit, and UF10.2 in 30-year UF-denominated bonds. Regular monthly auctions will begin March 26 and continue until December. The UF Monday was equivalent to CLP19,679, or $44.74.
BMG Expands 2-Year Bond to $250m
Brazil’s Banco BMG has sold $250m in 2010 6.875% bonds priced to yield 7%, upsizing from a planned $100m. Demand reached about $375m, Ricardo Gelbau, the bank’s finance director tells LatinFinance. “A combination of the excellent fundamentals in Brazil, the attractive financial story of BMG, and the fact that we came out with 2-year notes,” were key to pulling off the deal in the current credit market, he says. “The market doesn’t want long-term assets.” A “sizeable portion” of the almost 70 investors came in at a “pre-sale” price offering a discount of one-eighth, he explains, declining to elaborate. Just over half the investors came from North America, with 23% European and 18% from LatAm. BCP led the Ba1 rated transaction, which closed late Friday.
Energisa Readies BRL Debt
Brazilian electric company Energisa has registered to sell BRL150m in 2014 debentures. The bonds will pay 110bp over DI. Citi is managing the sale, which awaits regulatory approval.