Scotiabank says it will seek approval from its board during its next shareholder meeting to invest about $100m in Peru for 2009 to strengthen its operations in the country. A source at the bank says the funds will come from dividends that will not be distributed to shareholders. He adds that specific investments have not been agreed upon yet, but that a part of the funds will be used to maintain a healthy level of reserves.
Yearly Archives: 2008
Posted inDaily Brief
El Salvador Gets IDB Infusion
The IDB has approved a $400m loan to El Salvador so the sovereign may increase the availability of credit to the private sector. The loan is for 5-years, including a 3-year grace period, and priced at 6-month Libor plus 400bp. The central bank will use the funds to purchase short-term portfolio receivables for working capital and trade financing, thereby providing local financial institutions with new short-term loans for working capital and trade credits.
Posted inDaily Brief
WB Approves $100m Loan for Panama
The World Bank has approved a $100m loan for Panama. The fixed-term loan is repayable in 25 years and has a grace period of 2 years. The transaction “will support institutional reform and key policies for lasting and equitable growth in Panama, such as fiscal discipline consolidation, accountability, and the modernization of public financial management,” says Laura Frigenti, World Bank director for Central America.
Posted inDaily Brief
EM Debt Funds Gain, Outflow Slows
EM debt funds are up 3.55% for the week ended December 18, Lipper data shows, while outflows have slowed. Year-to-date EM debt has lost 17.88%, making them it worst performer of all world income funds. For the week ended December 18, global income funds are up 3.27% and international income funds are up 4.84%. Year-to-date, global income funds are down 4.94% and international income funds are up 2.56%, Lipper data shows. EM bond funds posted net outflows of $69m in the third week of December, well below the $800m they have averaged during their 19 week losing run, EPFR Global says. “Outflows from emerging markets bond funds were a fraction of their recent average,” says the fund tracker. “Outflows from global bond funds have increased nearly 13-fold while EM bond funds have seen last year’s net inflows of $4.2bn swing to outflows in excess of $14bn,” it adds.
Posted inDaily Brief
LatAm Equity Funds Eke Out Rise
LatAm equity funds registered a 1.37% increase for the week ended December 18. However, the fund is still the biggest loser of all world equity funds year-to-date, with a 57.37% drop, Lipper data shows. For the week ended December 18, EM funds are ahead by 2.75% and global small and mid cap funds are up 3.52%. Year-to-date, EM funds are down 55.10% and global small and mid cap funds are down 46.66%, according to Lipper data. Dedicated regional equity funds posted modest outflows, says EPFR Global. The fund tracker predicts record outflows in the $4.5bn-$6bn range for 2008, versus a $10.2bn inflow the previous year.
Posted inDaily Brief
Moody’s Takes Shine off Voto, Gerdau, CSN
Moody’s has revised the outlook to stable from positive on Votorantim Participacoes, Gerdau and CSN. For Voto, the action reflects the sharply declined prices and demand for all commodities produced by the group in the recent months, although Moody’s expects the impact on revenues and cash flows will be partially offset by the recent devaluation of BRL. “While the cement operations in North America have been negatively affected by the sub-prime crisis since the second half of 2007, we expect the performance of the cement business in Brazil will remain fairly robust during the first half of 2009 supported by the existing construction backlog,” says the agency. “However, we expect a declining demand for cement in Brazil thereafter due to an anticipated slowdown in the construction activity partly from reduced credit availability.” Voto is rated Baa3. For Gerdau, Moody’s notes rapid deterioration in steel industry conditions globally and expectations for weakened debt protection metrics for Gerdau and Ameristeel over the near term. “The current downturn goes beyond typical cyclical downturns given the underlying severity of the distress in the global financial markets,” says Moody’s. Gerdau is rated Ba1. Steelmaker CSN’s Ba1 outlook was also cut to stable from positive.
Posted inDaily Brief
Colombia Rate Cut Larger than Expected
Colombia’s central bank has cut its monetary policy rate by 50bp to 9.50%, more than was expected by most economists, who forecast at most a 25bp cut. The central bank says it expects inflation to drop to a range between 4.50% and 5.50% in 2009 from 7.73% registered in November. The central bank is expected to continue cutting rates in 2009 as inflation drops. Barclays economist Jimena Zuniga expects the rate to be eased by 200bp by August. “The central bank is likely to push the policy rate down to about 8.00%-9.00% likely by the end of 1Q2009,” says Goldman Sachs.
Posted inDaily Brief
BofA Names London-Based LatAm Head
Bank of America has given Jonathan Moulds – its existing president of Europe, EMEA and Asia – regional responsibility for LatAm and Canada. He will also be president of EMEA and be based in London, reporting to John Thain, president of global banking, securities and wealth management, once the merger with Merrill goes through. Merrill’s LatAm and Canada chief James Quigley will remain the operating head of LatAm, a Merrill spokeswoman says. He will report to Moulds. The BofA-Merrill deal is expected to go through in January and LatAm bankers are competing shops are eagerly awaiting news of the shop’s post-merger regional strategy.
Posted inDaily Brief
Conduit Spots LatAm Bargains
Regional infrastructure-focused private equity fund Conduit Capital detects significant opportunity in LatAm power generation and pipeline assets amid repricing related to the global crisis. “We are seeing the best value in 15 years,” Conduit chairman and managing partner J. Scott Swensen tells LatinFinance. He refers specifically to LatAm energy infrastructure, but the fund is also considering diversification into other sectors. The investor is steering clear of Paraguay, Venezuela, Ecuador, Argentina, Bolivia and Nicaragua, but he likes assets in the rest of LatAm, where there is stability. According to Swenson, there are strategic buyers – especially non-LatAm companies, including Canadian – interested in acquiring developed energy assets in LatAm. Sellers are mostly firms that have encountered problems with financing, he adds. Despite his outlook for continued M&A flow, Swenson does not expect any multibillion dollar deals in 2009. So far, he says, Conduit’s Latin Power III fund is 57% invested and another 18% is allocated. Total capital raised for that fund was $393m. “We will use up our capital in 2009,” Swenson adds. Future funds that Conduit may set up will likely invest in non-energy infrastructure projects like toll roads, tunnels and airports. Swenson adds that more opportunity will arise as most countries have turned such projects over to the private sector. Conduit last week completed the sale of the Libramiento natural gas compression plant and pipeline in Mexico to Canada’s InterGen for $89.2m. The shop says it will earn about twice what it invested in Libramiento with the sale. In October, Conduit invested more than $50m in a 50% stake in Brazil’s GLEP, a developer of hydropower projects.
Posted inDaily Brief
LatAm Growth Seen Slowing to 1.0%: IIF
The Institute for International Finance forecasts that GDP growth in LatAm will slow to 1.0% next year, down from an estimated 4.5% growth in 2008. Exports are expected to drop 7.0% in 2009 and a deficit of 2.3% of GDP is also expected as the trade surplus disappears and worker remittances fall. “Reduced demand for the region’s key commodity exports, a precipitous increase in global risk aversion, a substantial contraction of private capital inflows, reduced investment and a decline of consumer confidence, are resulting in lower economic growth and weakening external positions in virtually every country,” the IIF says.