S&P has lifted Colombia’s rating to BBB from BBB minus, it says. The agency cites positive trends in economic growth, as well as monetary policy and fiscal measures that better insulate it against external shocks, as among the factors in the ratings raise. “The government has taken advantage of recent years of favorable commodity prices to undertake structural changes in fiscal policy, establish a fund to save above-budgeted revenues from the commodities sector, improve its debt profile, and develop its domestic capital markets,” S&P says. The agency also expects continuity in pro-investor economic policies after the 2014 national elections, thanks to a political consensus in favor of market-oriented policies. The outlook is stable. The move may help the country’s bonds, Nomura says, pushing yields on its 10-year closer to LatAm triple-B peers. It spots the bond trading to yield 2.99%, compared to Brazil at 2.70%, Peru at 2.87% and Mexico at 2.40%.
Category: Corporate & Sovereign Strategy
Maduro Picks Central Bank Head
Nicolas Maduro has tapped former commerce minister Edmee Betancourt for the role of president of Venezuela’s central bank. The nomination made by the Venezuelan president remains to be approved by the country’s National Assembly. Barclays flags the move as problematic. “This is not a positive nomination as we believe Betancourt – who is an ally of Jorge Giordani – will continue with the policy of subordinating the BCV to the Executive power,” the shop says. Following approval, she would take the spot left vacant by Nelson Merentes, who has been named finance minister.
Moody’s Lowers Urbi
Moody’s has downgraded Urbi to Caa2 from B2, it says, due to a missed interest payment on its 2016 bond. A default will cause a payment acceleration of Urbi’s bonds, placing a large burden on the company’s liquidity position and viability, the agency says. “Urbi has limited liquidity and its cash flows continued to be stressed, which likely implies difficulty in being able to quickly develop and sell homes,” it says. Moody’s expects Urbi to continue to experience deterioration in its operating profits and credit metrics. The rating remains under review for downgrade. The move follows a similar downgrade from Fitch Monday.
Fitch Downgrades Urbi, Again
Fitch has downgraded Urbi’s rating to C from CCC, it says, citing Urbi’s failure to pay interest due April 19 on its 2016 senior notes. The Mexican homebuilder’s notes have a 30-day grace period. “Failure to pay in full the due amount at the end of the grace period and/or the execution of a DDE [distressed debt exchange] will result in a downgrade to restricted default,” says Fitch. The move follows a downgrade to CCC from B from Fitch and a cut to CCC by S&P in March.
HSBC Adds Oil Analyst
Luiz Felipe Carvalho has joined HSBC as an equity analyst covering the oil and gas sector, says a person familiar with the move. He will be based in Brazil, where he had been covering the same sector at BTG Pactual. He was also previously at Santander Asset Management, Transocean and Shell.
Interbank Gets Lift
Fitch has upgraded Banco Internacional del Peru (Interbank) to BBB from BBB minus, it says. The bank continues to show strong performance while maintaining excellent asset quality metrics, strong loan loss reserve coverage and sound capital levels, the agency says. “Given the strong economic backdrop, significant growth potential and adequate credit policies and risk management tools, the bank will maintain its structural strengths and performance in the foreseeable future,” Fitch says. The outlook is stable.
Venezuela Names Finance Minister
Venezuelan President Nicolas Maduro has named Nelson Merentes as finance minister, in a series of cabinet moves following his recent election. Merentes, who has held the position before under Hugo Chavez, has been central bank president since April 2009. Barclays points out that during Merentes’ previous run as finance minister, in 2004-2007, he held Venezuelan 5-year credit default swaps at an average of 230bp. Levels are now at 780bp, the bank says. Barclays adds that it sees better relationships with the private sector and international markets ahead under Merentes. “Nonetheless, he will have a bigger challenge today than he had five years ago, given the increase in the size of the state and the number of the public enterprises after the expropriation policy that President Chavez started in 2007,†Barclays says. Merentes was also finance minister in 2001-2002.
S&P Negative on Venezuela
S&P has lowered the outlook on Venezuela’s B+ credit rating to negative from stable, it says, due to increasing political risk. The close retults of last week’s presidential elections and the doubts as to their legitimacy have increased uncertainty, which could weaken the government’s policy implementation, the agency says. A weakened government seeking less pragmatic and more interventionist policies would increase economic nonequilibrium, and likely prompt a ratings downgrade.
Moody’s Upgrades Belize
Moody’s has raised Belize’s government bond rating to Caa2 from Ca, saying the country’s debt restructuring is positive for liquidity. Still, it says further potential fiscal woes remain on the horizon for Belize. “We expect a combination of structural factors to constrain the rating in the Caa space for the next 2-4 years, indicating a relatively elevated likelihood of default recidivism,” it says.
Brazil poised to hike rates: analysts
Brazilian authorities are likely to tighten monetary policy faster than expected to combat resurgent inflation, experts at LatinFinance’s Brazil Issuers and Investor Forum said Tuesday, on the eve of a central bank interest rate decision.