The IDB has approved a master financing facility of up to $42m in long-term loans for Costa Rica-based developer Caribe Hospitality. The funds will be used to finance up to 8 Marriott hotels in Costa Rica, Nicaragua, Guatemala, Panama, Jamaica, Trinidad & Tobago, and Mexico. The hotels must be able to get Leadership in Energy and Environmental Design (LEED) certification, the standard for “green” building design.
Yearly Archives: 2011
Posted inDaily Brief
LatAm Equity Flows Slumped in 2010
Inflows into LatAm equity funds totaled $1.7bn last year, much less than the $11.1bn seen in 2009, EPFR Global says. “LatAm funds had a relatively strong Q4 as investors sought exposure to the global commodities story,” it says. Although flows into Brazil funds again dominated, the second half of the year showed an increasing interest in second tier markets such as Peru and Chile, it adds. Brazil funds attracted $1.5bn in 2010 and $5.2bn in 2009. Meanwhile, EM equity inflows for 2010 soared to $92.1bn, shattering the $83.3bn record set in 2009, according to the shop. GEM equity fund inflows for 2010, $62.0bn, also were higher than those of 2009, $44.2bn. As for performance, Lipper data show that they ended 2010 on a positive note. EM funds were up 19.04%, LatAm funds gained 19.47% and global small and mid-cap funds were up 24.74%.
Posted inDaily Brief
Eurasia Sees Risk in Mex, Peru, Arg
Violence in Mexico and underperformance in Argentina and Peru are among the top 10 risks for investors this year, according to political risk consultancy Eurasia. It does not expect state failure in Mexico, and says fighting will likely be contained in the northern and western regions. Eurasia does predict an escalation. “There will be a rising risk of more dramatic violence, including assassination attempts on government officials or prominent local, American, or other foreign business figures,” says the group. In Argentina, Eurasia says markets appear overly optimistic that policy will improve, either by the removal of Kirchner or fresh policy direction if she wins. “Kirchner is likely to win and policy is unlikely to change, leading to higher inflation and a further continuation of populist policy,” says Eurasia. It adds that investors in Peru underestimate the potential for populist candidate Ollanta Humala to make a serious run at the presidency. “He’s an underdog to be sure, but he has a sporting chance. And even if a more market-friendly candidate wins, we’ll see more resource nationalism in post-election policy,” says the group. Capital controls to stem currency appreciation are another threat, and Eurasia identifies Colombia and Peru as among 4 countries most likely to enact them this year. Eurasia’s head of research David Gordon says he is not concerned about political risk in Brazil, although he notes creeping resource nationalism. “On balance I think the Brazilians look very good indeed,” he adds. The number one global risk is what Eurasia calls “the G-Zero,” in which the world’s major powers set aside aspirations for global leadership—alone, coordinated, or otherwise—and look primarily inward for their policy priorities. “Key institutions that provide global governance become arenas not for collaboration but for confrontation. Global economic growth and efficiency is reduced as a result,” says Eurasia.
Posted inDaily Brief
ING Building Cross-Border DCM
Arthur Rubin has been hired as head of LatAm DCM at ING in New York, as the Dutch bank looks to build a business in origination and execution. “Rebuilding the LatAm DCM is a way for the bank to leverage the relationships with EM investors that are already there and the capacities we have in other emerging markets,” Rubin tells LatinFinance. The DCM banker cites the bank’s developed lending, research, sales and trading capacities in the region, as well as DCM expertise elsewhere in EM. While 2010 saw record DCM volume in LatAm, ING enters a crowded field, with many other recent entrants and re-starters. It will look to leverage existing relationships in the region, Rubin says, while also covering new issuers – growth-oriented higher yielding names that have traditionally financed in local markets. With growing companies, particularly in Brazil and Mexico, not always finding size and tenor domestically, and USD EM investors unsatisfied with yields, Rubin sees an opportunity. Rubin was previously MD at Atlas One Financial, after leaving Morgan Stanley’s DCM operation at the end of 2008. He had spent 4 years at the bulge bracket firm specializing in liability management and Brazil coverage. He had also previously worked in LatAm DCM at ABN AMRO and Goldman Sachs. He will report to Scott Dainton, head of US DCM, and Jan Mutsaers, global co-head of DCM. ING has offices in Brazil, Mexico and Argentina. Its most recent DCM role was co-manager on Cemex’s $1bn bond Tuesday.
Posted inDaily Brief
Petrobras Confirms Galp Talks
Petrobras and Eni have confirmed talks over a potential sale of the Italian energy giant’s stake in Galp. Rumors had surfaced that Petrobras offered EUR3.5bn for Eni’s piece of in the Portuguese oil and gas company. This is significantly less than the up to EUR4.7bn Eni was last week reported seeking for the asset. According to Lucas Brendler, equity analyst with Banco Geracao Futuro de Investimentos, an investment in Galp is attractive to Petrobras as an easy way to gain access to oil fields outside Brazil, in addition to expanding its position among pre-salt reserves off the coast. Galp holds 10% of the offshore Tupi oil fields, in which Petrobras has a 65% stake. Acquiring a stake in the company would recapture some of Petrobras’ participation in the field. Brendler says the two sides may be staking out positions ahead of an eventual compromise on price. However, the cost of a deal might include more than just the initial price tag, analysts say. Galp may need further capex to develop its pre-salt reserves, according to Andres Kikuchi, equity analyst at Link in Brazil. That could substantially increase the total cost of such a deal for Petrobras, though the return on investment could still be attractive, he says. Brendler says Petrobras has appetite for such a deal, though reaching an agreement will depend on Eni. Galp had been trading around a $12bn market cap even before the recent confirmation of talks, so it may be difficult to pull of a deal that implies a lower valuation. Eni acquired its stake in 2000. A lock-up period with shareholders expired at the end of 2010. It is understood that none of the parties has yet retained an advisor. A Galp spokesman declines to comment.
Posted inDaily Brief
TI’s Etecsa Stake Reported for Sale
Telecom Italia (TI) is rumored to be selling a 27% stake in Cuba’s telecommunications company, Etecsa, to the Cuban government, according to Italian newspaper Il Sole 24 Ore. TI declines to comment on the rumors, though a Caribbean analyst who asks not to be identified says such a move would be inconsistent with Cuba’s recently announced austerity measures. Mexico-based UBS equities analyst Tomas Lajous says America Movil and Spain’s Telefonica would be natural buyers for the stake, as Mexican and Spanish companies are widely invested in Cuba. TI has stated publicly it would consider a sale of the stake.
Posted inDaily Brief
Bladex Plans First Huaso of 2011
Panama-based foreign trade bank Bladex could be the first company to issue a huaso bond in the Chilean market this year, say Chile-based bankers. They add that the bank is planning to issue up to UF2.5m ($110m) in 2 tranches, one for 3 years and the other for 5, but that this will depend on market appetite. Bankers say an issue could happen as early as January 10. Proceeds will go to finance lending operations. BBVA is heard leading the A+/AA minus issue. Bladex had been expected to launch a huaso bond for about a year, the bankers say. Mexico’s America Movil did the last huaso, selling UF5m in 2035 notes last May. Banchile-Citi and Santander managed that sale, rated AA+.
Posted inDaily Brief
Mexican Restaurateur Signs Loans
Mexico’s Alsea has signed bank loans totaling MXP600m, it says, with nearly all of the proceeds going to repay bank debt. The restaurant operator signed separate MXP300m loans with Santander and HSBC, each for 5-years, at an interest rate of TIIE plus 150bp. “This operation allows the company to improve its maturity profile, extending its average duration to 2.6 years, and also resulting in financing at lower rates,” Alsea says. It adds that the funding should give Alsea more freedom to continue with expansion plans.
Posted inDaily Brief
Cencosud Looks to Lead Debut Borrowers
Chilean retailer Cencosud is set to meet investors ahead of what would be its first dollar bond, starting off a year LatAm bankers hope will see many first-time USD issuers. After being heard last month seeking a 10-year benchmark, Cencosud will meet investors January 6-11, in New York, London, Switzerland, Los Angeles, Boston, Bogota and Lima on a “non-deal” roadshow led by Deutsche Bank, JPMorgan and Santander, according to investors. Baa3/BBB minus Cencosud enters 2011 with an ambitious expansion plan, with analysts estimating a $1bn spend this year. Chileans could account for a decent part of issuance early in the year. CMPC has roadshowed and Falabella is expected with a benchmark as soon as this month. The first of a string of Argie debutants could also start appearing in January, from a pack including developer Raghsa and Argentine Gaming Group. “We should see a lot of high-yield issuance and new names early this year,” says a New York DCM banker, adding that some of the traditional January giants – Mexico, Brazil, BNDES, Petrobras, Colombia – also are monitoring markets. Among potential issuers, Brazil and BNDES will be faced with the choice of coming in USD or global BRL, while Petrobras must get cracking on what should be at least $4bn raised from capital markets in 2011. Also in the oil space, Argentina’s YPF is expected to return to markets soon, for about $600m.
Posted inDaily Brief
Cemex Jumbo Restarts DCM
Cemex has rung in the New Year with a $1bn 7-year priced at the tight end of guidance on $5.75bn in orders. The 2018 NC4 priced at 99.364 with a 9.000% coupon to yield 9.125%, versus 9.125%-9.250% guidance which was revised from 9.375% area and mid-9.000% early whispers. “Compared with the 2016s, it’s fairly priced within the curve,” Carlos Legaspy, president of Precise Investment Management, which has $400m in fixed income under management, tells LatinFinance. He spotted the 2016 trading to yield around 8.72%, and found the initial pricing indications to be cheap. The bond was up 1.125-1.250 points in the gray Tuesday afternoon, according to investors. On the back of a brief mid-December roadshow, the B/B+ Mexican cement maker is continuing debt rollovers central to a challenging plan to de-lever and regain investment-grade status. In addition to prepping for a quick January execution, one of the aims of Cemex’s meeting the buyside in December was to address re-working of covenants it had agreed with banks in October after a string of quarterly losses jeopardized its ability to stay on deleveraging target. “The company’s operating and free cashflow should increase sharply once underlying business conditions improve due to its operating leverage. However, a rebound that would be substantial enough to accelerate debt reduction is not expected to occur until at least 2012,” Fitch says. The $5.75bn book is one of the largest-ever for the issuer, says a banker on the deal, who notes 380 accounts participated, the majority from the US. Bank of America Merrill Lynch and JPMorgan, managers on last month’s roadshow, were global coordinators. They were joined by BNP, Citi, HSBC, RBS, and Santander as bookrunners. The issue is guaranteed by Cemex’s Mexico, Spain and New Sunward Holding units and secured by a first priority interest over a collateral package consisting of all of the shares of the Mexican and 6 other units. Proceeds are marked for debt refinancing and general c