HSBC has added equity research analysts, with Leonardo Correa joining as a Sao Paulo-based senior vice president, covering LatAm metals and mining, the bank says. He previously worked as the regional sector head at Barclays, and follows recently-hired oil, gas and petrochemicals analyst Luiz Carvalho from the British bank. Also, Jonathan Brandt moves over to head pulp and paper coverage for LatAm, Eastern Europe, Middle East and Africa, coming from HSBC’s metals and mining team. Earlier this year, HSBC also hired three senior LatAm equity analysts, bringing on Sandra Boente from Deutsche Bank to covering the utility and water sectors, Alexandre Falcao from XP Investimentos for transport, infrastructure and industrials, and Francisco Schumacher from Deutsche for Southern Cone and Andean strategist.
Category: Corporate & Sovereign Strategy
Moody’s Raises Hypermarcas
Moody’s has upgraded Hypermarcas to Ba2 from Ba3, it says, due to improved credit metrics. The consumer products company’s focus on core business assets, organic growth and deleveraging are the key drivers. The agency notes that Hypermarcas was able to reduce its adjusted gross leverage ratio to 4.3x in December 2012 from 6.8x in the previous fiscal year. It expects additional improvements in leverage ratios, supported by both debt reduction and a stronger Ebitda stream. The ratings outlook is stable.
Urbi Downgraded on Payment Failure
Fitch and Moody’s have downgraded Mexican homebuilder Urbi Desarrollos Urbanos (Urbi) to RD from C and to Ca from Caa2, respectively, the agencies say. The moves follow the missing of a a $3.9m payment on its 2014 bonds due April 30, and a similar miss on 2016 bonds earlier in April. Rothschild is advising Urbi on debt restructuring measures. Urbi and its peers Javer, Homex, and Geo, have been struggling with problems including cash flow concerns, excess capacity and less favorable government policies.
Deals of the Quarter Century Awards
LatinFinance’s Deals of the Quarter Century Awards recognize the most impressive capital markets transactions in Latin America over the past 25 years – through good times and bad.
Prepare for Lower Commodity Prices: Ex-IMF Official
Latin America’s policymakers must prepare for lower commodity prices, Claudio Loser, president of Centennial Group Latin America, tells LatinFinance. “The last several years of commodity-led prosperity have resulted in a degree of complacency in Latin America that is misplaced. The impact of lower terms of trade can be staggering. Prices will continue to fluctuate, and may even show a secular downward trend,” the veteran economist and former director of the Western Hemisphere at the IMF says. Better terms of trade since 2000 have meant an increase in gross domestic income in excess of GDP growth during that time, he explains, an effect that would erase even if terms of trade were to normalize. Such a reversal would mean trend growth of 2.0%-2.5%, down from 3.7%. “A steep but not unusual decline in terms of trade of 10% would result in a one-time decline in income of 5% in Latin America, with grave consequences for public finances and the external accounts,” Loser says. Fiscal discipline, including structural rules like in Chile, a competitive private sector, better education, and a well-protected financial system are of the essence to survive, he adds. Separately, the IMF identified Monday a “reversal of the favorable tailwinds of easy financing conditions and strong commodity prices that have prevailed since 2010,” as the most important risk to LatAm, in its annual regional outlook. The fund has revised the GDP growth projection for the region for this year to 3.4% from 3.6%.
TGI Gets I-Grade Mark
S&P has raised the credit ratings of Transportadora de Gas Internacional (TGI) to BBB minus from BB, it says. The move is based on the Colombian gas transporter’s improved business risk profile to due to the stability and predictability of its cash-flow stream, a position as a monopoly in the markets it operates, the high credit quality of its industrial clients, and an improvement in tariffs. Specifically, government approval of higher rates in November 2012 means a 10% increase in regulated revenues. The unit of Empresa de Energia de Bogota is pursuing additional increases. The outlook is stable. TGI is now rated Baa3/BBB minus/ BBB minus.
Urbi Misses Payment
Mexican homebuilder Urbi Desarrollos Urbanos will not make a $3.9m payment on its 2014 local bonds that was due April 30, it says. Last month, Fitch downgraded Urbi’s rating to C from CCC, on its failure to pay interest on its 2016 bonds. The move followed a downgrade to CCC from B from Fitch and a cut to CCC by S&P in March. Rothschild is advising Urbi on debt restructuring measures. Urbi and its peers Javer, Homex, and Geo, have been struggling with problems including cash flow concerns, excess capacity and less favorable government policies.
Peru Sees Rates Steady: Velarde
Peru’s central bank does not yet see signs for a rate cut, despite a dramatic drop in commodity prices that may force authorities to revise down growth forecasts, its central bank governor Julio Velarde tells LatinFinance. “Of course we see a slowdown but the signs are still not there [for lowering rates]. This growth slowdown was expected, but I don’t believe it will be more dramatic,” the official says.
Velarde’s comments came amid mounting speculation that the central bank will move to slash rates to boost growth that is below market expectations. It next meets May 9. The governor adds that even though commodity prices have fallen, “they’re still at a plateau that is pretty high.” The central bank might revise down its growth projections, he said. “There has been such a dramatic fall in commodity prices that we now have to review our forecasts for growth for the coming years. These prices might affect the growth of the economy.” But he insists that growth was nevertheless stable. “We don’t have the tailwinds anymore but we don’t have the headwinds either.” Authorities were projecting an average of 6.5% growth before the drop in commodity prices, he added. Peru’s output expanded 5% in February from a year earlier after a 6.2% jump in January, the national statistics agency reported this month. The central bank kept rates on hold for a 23rd consecutive month on April 11, citing stable growth and slowing inflation.
Ecuador Names Finance Minister
President Rafael Correa has named Fausto Herrera as Ecuador’s minister of finance, according to government documents. Herrera is promoted from deputy minister and replaces Patricio Rivera, who becomes economic policy minister. Herrera and other officials have said that Ecuador plans a debt exchange offer to holdout creditors this year, to be followed by a new international bond sale.
S&P Raises Minerva
S&P has lifted Brazilian meatpacker Minerva’s ratings to BB minus from B+, it says, citing a better capital structure and liquidity improvements. Minerva is expected to pay down debt and see rising cash flows. Cattle pricing and exports remain key to the company’s positive growth, S&P notes. The outlook is stable. In January, Moody’s upgraded Minerva to B1 from B2, citing improvement in the company’s capital structure following a December BRL457m ($225m) equity issuance.