S&P has revised its outlook on the Bahamas to negative from stable, citing the impact of US contagion on the tourism and construction sectors, which is causing job losses and undermining banks’ asset quality. The ratings also cut its GDP growth expectations for 2008 and 2009 to 1.1% and 1.0%, respectively, from previous projections of 3.0% and 4.0%, respectively. Efforts to boost growth may also end up increasing government debt levels, says credit analyst Olga Kalinina, adding that the government has recently announced countercyclical policies, including a robust capital-spending program, new unemployment benefits, and relief for low-income households.
Yearly Archives: 2008
Posted inDaily Brief
Vene Election Result Seen Tempering Chavez
After the opposition won 6 out of 23 regions in Venezuela’s sub-national elections, including some of the most populated and economically important areas, economists expect a more subdued Chavez to make the country’s economy a priority. “A less radical president, and an executive more focused on management, should give more support to Venezuelan assets,” says Barclays’ LatAm research director Alejandro Grisanti. A few days before the election, finance minister Ali Rodriguez announced that the government bought back $800m worth of global 2027s and that it would evaluate further buybacks. Igor Arsenin, head of LatAm strategy at Credit Suisse, says that the bonds priced at about $68 the day after the elections, up from $64 on November 21.
Posted inDaily Brief
Argentine Corporates on Watch Negative
Fitch has placed 13 Argentine corporates on negative watch after the nationalization of the private pension funds was approved by the senate, making it official. In Fitch’s view, the nationalization of the AFJPs will heighten liquidity risks due to diminished investor perception of Argentina as well as increase funding costs to the corporates. The absence of private pension funds would also marginalize the domestic bond market as a source of funding and liquidity for these companies going forward. The corporates on Fitch’s negative watch are: Alto Palermo (rated B+), Cablevision (B+), Quilmes (BB), IMPSA (B), Inversiones y Representaciones (B+), Pan American Energy (BB), Petrobras Energia (BB), Telecom Argentina (B+), Telecom Personal (B+), Telefonica de Argentina (B+), Transener (B), TGS (B+) and YPF (BB+).
Posted inDaily Brief
Su Casita Readies RMBS
Su Casita aims to place MXP1.65bn in 2035 RMBS as soon as Thursday. The Mexican mortgage lender plans to use the time-tranching structure seen in its other deals this year. The issue will be split into two equal tranches that amortize one after the other. To get it done in this difficult market, Su Casita is making use of a partial guarantee from FMO of the Netherlands, the first time it as used such a guarantee in at least a year. The issue is rated AAA on a national scale and HSBC is managing it. If successful, BBVA Bancomer could also follow through on a 2029 MXP-denominated issue of up to MXP6.4bn, for which it recently began the regulatory process. Before markets closed down earlier this year, Su Casita was one of Mexico’s most active local issuers. Spain’s Caja Madrid bought a 60% stake for $342m, taking its ownership to 100%.
Posted inDaily Brief
Cemex Sets Minimum on Local Swap
Cemex has set a minimum spread to be paid on the 2011 UDI and MXP-denominated bonds it is offering through a bond exchange offer launched two weeks ago. The Mexican multinational cement producer will pay a minimum spread of 225bp over the government’s 3-year UDIbonos for the UDI notes it is offering, and a minimum spread of the 28-day TIIE plus 200bp on the MXP notes included in the offer. The spread can be raised at Cemex’s discretion, and will be finalized at the close of the offer period, expected December 10. The Mexican multinational cement producer is offering the new notes to holders of MXP5.7bn worth of local bonds coming due in the next four months. The notes being tendered include UDI-denominated bonds paying 6.50%, 6.28% and 5.30%, and MXP-denominated notes paying 90-day Cetes plus 0.99%. The new notes are rated AA on a national scale. Banamex and BBVA Bancomer are managing the process.
Posted inDaily Brief
Peru’s Norsemont Attracts Suitors
Norsemont Mining says it has received unsolicited offers from suitors interested in acquiring the company. The Canadian miner, which operates the Constancia project in southern Peru, has hired Fraser Milner Casgrain as legal counsel and is in search of a financial advisor to evaluate expressions of interest. No formal bids have been received yet, says the company. Norsemont Mining, which trades on the Toronto Stock Exchange and the Peruvian bolsa, has a market cap of CAD94m. Shares were down almost 5% November 24.
Posted inDaily Brief
Bancolombia Beats Expectations
Third quarter net income increased to COP367bn at Bancolombia, surpassing expectations of analysts at Colombian research firm Bolsa y Renta. That represents a 16% increase compared to the third quarter of 2007. The firm expected income to grow to COP324bn. For 2008 as a whole, Bolsa y Renta analyst Mauricio Restrepo expects the bank to see income grow 25.4% to COP1.36trn compared to the previous year. He also believes Bancolombia’s stock price will stand at COP14.25 per share in December 2008. On November 21 shares traded at COP11.08.
Posted inDaily Brief
Embraer to Appoint New CFO
Brazilian aviation major Embraer is expected to name Luiz Carlos Aguiar its CFO, effective January. The former Banco do Brasil banker is currently Embraer’s executive VP for the defense and government market. He will replace Antonio Luiz Pizarro Manso, who has CFO of Embraer since 1995.
Posted inDaily Brief
Mexico’s GDP Slowing to a Halt
In 2009, Mexico’s GDP growth is likely to stay below 1.0% as US industrial production, especially in the auto industry, drops. Credit Suisse expects GDP to expand just 0.6%, Merrill Lynch expects a 0.4% increase and JPMorgan sees no growth at all. Merrill says that US industrial production will decline 6% in 2009, hurting Mexico. Since 80% of Mexican auto industry exports go to the US, Merrill expects the slowdown in the US to hurt consumer spending, dent employment levels, cause a drop in real wages and a decrease in worker remittances to Mexico next year. Credit Suisse expects Mexico’s industrial output to contract by 2.2% in 2009, compared to a fall of 0.3% in 2008. Analysts expect Mexico to expand by as little as 1.3% this year, down from 3.2% in 2007.
Posted inDaily Brief
Collateral Concerns Loom for Cap Cana Bonds
Lack of transparency at Cap Cana, the Dominican greenfield resort project, has vexed analysts seeking to ascertain the risk and recovery value for the company’s outstanding bonds – some $250m in 9.625% 2013 notes issued in 2006. With few clear and hard facts from Cap Cana’s management regarding the performance of the high end real estate project, credit analysts find themselves having to speculate on the implications of statements made by the company. For Sam Fox, head of EM structured finance at Fitch, which rated the notes ahead of their issue, the main questions revolve around three main points: how much capital is available in the deal’s escrow account and whether it is enough to cover the cost of the first phase of construction, slated to end in the Q1 2009; what specific properties are backing the 2013 notes; and whether Cap Cana’s holding company is committed to guaranteeing completion of construction should the project run out of cash. Separately, in a November 17 report on the credit, JPMorgan observes the Cap Cana’s latest remark on the first phase of construction is unclear about the progress it has made on construction. “The company’s press release … does not provide a clear answer to the status of Phase I,” notes the report, which goes on to infer the company is probably close to a point where it can release some of the assets that back the notes. As questions on the credit multiply, the company’s management has been increasingly hard to reach, says one analyst.