Remittances to DomRep are expected to rise 5.0% in 2008 to almost $3.2bn. Remittances to Guatemala, meanwhile, are expected to increase slightly to $4.28bn in 2008 from $4.13bn in 2007, according to JPMorgan. The trend is expected to slow down in 2009, says the shop. Remittances to DomRep are expected to remain flat in 2009 and Guatemala’s should drop to $4.06bn, as the international financial crisis takes a toll on both countries.
Yearly Archives: 2008
Posted inDaily Brief
Moody’s Sees Guatemala Deterioration
Moody’s has cut the outlook on Guatemala’s ratings to stable from positive. The affected ratings are the Ba2 foreign currency rating, Ba1 country ceiling for foreign currency bonds and Ba3 country ceilings for foreign currency deposits. The cut reflects a relative worsening of Guatemala’s credit metrics compared to similarly rated countries, as well as the impact of the global crisis, which will make credit improvements more difficult. “Despite recent above-trend growth, Guatemala is growing slower than the median for Ba sovereigns; Guatemala is getting poorer and smaller compared to other Ba countries,” says Moody’s vice president Gabriel Torres. “Ten years ago Guatemala’s per capita GDP was 82% of Ba rated nations. Today that has dropped to 58% because of the lower relative growth,” he adds.
Posted inDaily Brief
Fitch Trims Argentina Local Rating
Fitch has downgraded Argentina’s long term local currency rating to B minus from B, reflecting the country’s increased risk in meeting fiscal and external financing needs over the next 2 years and the government’s inadequate policy response to the global financial crisis. Economic growth is likely to decelerate sharply in 2009 to 1.6% due to declining terms of trade, external demand and the current administration’s inadequate policy response which has amplified the external shock on the domestic economy through a deterioration of investor and consumer confidence and higher domestic interest rates. “The government’s attempts to continue to provide a strong fiscal stimulus will be constrained by slower revenue growth and non-negligible financing needs,” says Fitch analyst Erich Arispe. Government debt amortizations, estimated at 6.8% and 5.4% of GDP in 2009 and 2010, respectively, are almost triple the median for sovereigns rated B by Fitch.
Posted inDaily Brief
Conduit Exits Mexico Asset
Regional infrastructure private equity specialist Conduit Capital Partners has completed the sale of the Libramiento natural gas compression facility and an associated 65km natural gas pipeline to InterGen. The total value of the transaction, which was originally announced in June, was $89.2m, excluding the assumption of non-recourse debt. Starting in 2005, Conduit worked with minority partners Green Energy and Infrastructura Para Energia to build, own and operate the facility and pipeline, located in Queretaro, Mexico. Since the project’s completion in 2007, it has had a long-term contract in place with Pemex Gas y Petroquimici Basica. Conduit’s financial partner was NordLB. The Libramiento investment was made in 2005 from Conduit’s Latin Power III fund, which closed in July 2006 at $392m. Latin Power III is 57% committed, with another 18% of the fund allocated to projects in development. In December 2007, Conduit sold Jamaica Energy Partners for $92.5m. Conduit is presently still investing from Latin Power III. “We continue to see demand for independent power production facilities and other infrastructure projects in Mexico and our other target countries, and we will continue looking for opportunities throughout Latin America and the Caribbean,” says Marc Frishman, a partner at Conduit.
Posted inDaily Brief
Usiminas to Buy Steel Pipe Maker
Usiminas has agreed to acquire steel pipe manufacturer Zamprogna for BRL160m. The deal is expected to close in February. As of September 30, Zamprogna’s working capital added up to BRL245m and consolidated debt was BRL405m. Financial advisors and financing terms were not disclosed and company officials did not return calls for comment.
Posted inDaily Brief
Citi Chops Mexico Equity, Tips LatAm Bounce
Citi is cutting Mexico equity to underweight from neutral and adding to an overweight in Chile, while also projecting dollar-adjusted returns of 41% in LatAm stocks next year. “All of these returns should be expected after a Q1 pullback in regional markets,” says the shop, which expects end-2009 market targets of 55,000 on the Bovespa, the Mexican bolsa at 24,000, Chile’s IPSA at 2,900, Colombian IGBC at 10,500 and Peru’s General ending at 9,500. Citi anticipates an early-2009 new relapse of regional markets towards the lower end of current trading range as the Q4 report card comes in, dented by a very weak global economy and poor corporate releases. “We expect a strong upside breakout of equity markets from April/May on, as investors anticipate the bottoming out of the US and global economies,” says the shop. Its economists expect global GDP to rise by just 0.5% in 2009, including a 1.5% contraction in the US. EM should grow by 3.8% in 2009, accounting for over 100% of global growth, while it expects LatAm to slow to 1.6% expansion in 2009, with Brazil at 2.2% and Mexico declining by 0.2%. Citi is overweight Brazil, neutral in Colombia and underweight Peru and Argentina. “We stay largely defensive in sector terms for the near term. It is too early for the full “recovery trade”,” adds the shop.
Posted inDaily Brief
Vivo Plans Short Debentures
Brazilian mobile phone company Vivo Participacoes is planning an issue of BRL210m in non-convertible 1-year debentures. The deal will price at 113.55% of DI and mature January 11 2010, according to a company statement.
Posted inDaily Brief
IDB Lends $500m to Costa Rica
The IDB has approved a $500m loan for Costa Rica. The funds will help the country’s central bank extend lending in dollars to local financial institutions so that they can channel additional credit for working capital and trade financing to exporters and other enterprises within the export chain. The loan is for a 5-year term, with a 3-year grace period, at 400bp over 6-month Libor on an annualized basis.
Posted inDaily Brief
Banco General Perp Sale Takes Off
Panama’s Banco General has sold a $10m piece out of $250m in dollar-denominated 6.5% coupon perpetual bonds in the local market, says a source at the bank. The perps are callable after 5 years but maintain their 6.5% coupon permanently. The deal is the first perpetual bond done by Banco General in any market. BG Investment, the bank’s capital markets unit, is managing the sale.
Posted inDaily Brief
Castano Departs UBS DCM
Antonio Castano, executive director in the LatAm DCM group, has left UBS, according to a source at the company. Castano, a former deputy general director of public credit in Mexico, joined the Swiss bank in early 2004. The recent departure leaves Marcelo Delmar as the only senior person left in the shop’s DCM group following various rounds of departures that saw the exit of Nadine Cavusoglu and Jorge Barreda earlier this year. As with most other firms, the bank is downsizing its debt team in line with anticipated shrinkage in issuance volume next year.