Banco do Brasil (BdB) is making a concerted effort to step up long-dated dollar lending to domestic and non-Brazilian corporate clients. The move is rattling foreign banks active in Brazilian syndicated and bilateral lending. BdB and other Brazilian banks have nabbed sizable market share by offering local clients relatively cheap loans at attractive tenors. In 2009, BdB’s deployment of pre-export credit to companies surged 6x, albeit from a low base, to $3.1bn, according to Admilson Monteiro Garcia, head of the bank’s international division. That figure could jump above $5bn this year, he adds. “In the second half of last year, there were 6 pre-export loans done in Brazil and we participated in all of them,” adds the banker. The strategy of offering clients dollar loans – which also include shorter dated export credits called ACCs and ACEs – marks a significant departure for BdB, which has historically focused exclusively on BRL-denominated loans. Total dollar lending at BdB grew marginally in 2009 to $14.0bn, up from $13.5bn in 2008, though longer dated pre-exports accounted for a larger portion of the pie in 2009 than the previous year. Among deals BdB has participated in recently are Fibria, Cosan and Odebrecht’s twin platforms. For iron ore miner Samarco, the bank swallowed whole a $300m 5-year trade credit line late last year. This torpedoed competitive bids from foreign banks eager to lend to the high quality credit. Monteiro tells LatinFinance that the credit crunch actually boosted the state-owned bank’s liquidity position as global lenders and corporate depositors migrated to quality institutions, such as BdB. “This extra liquidity came to us at a time when we wanted to create anti-cyclical movement [to lend in Brazil,]” he says. The banker notes corporate dollar lending from international banks was drying up and companies were in need of dollar lines. “This [growth in lending by BdB] won’t stop in 2010,” says Monteiro, who claims his bank’s share of the do
Category: Daily Brief
Correction: Nextel Peru Dials A/B Loan
A February 4 brief entitled “Nextel Peru Dials A/B Loan,” misspells the name of a participating bank. The correct spelling is Banco BIF.
Costa Rica Election Seen Market Neutral
Laura Chinchilla, presidential candidate for Costa Rica’s ruling party, the Partido de Liberacion Nacional, could win the country’s presidential elections on February 7. A CID-Gallup poll shows she has almost 42% of the vote. Barclays believes the election will possibly go into a second round, but says this should not “roil the markets” as she will likely be projected to win by an ample margin. It recommends a neutral position on Costa Rica assets. Another economist who does not want to be identified says that the election results will be “a non-event from the market’s perspective.” He adds that regardless of who wins the elections, no material change in policy is expected. Barclays adds that for 2010, it expects economic growth of 2.9%, versus a 1.4% contraction in 2009, driven mostly by a rebound from the very low level of economic activity in 2009 and slightly better external demand.
CS Builds EM Council
Credit Suisse is forming an internal council for EM. Among other things, it will promote EM within the bank, according to officials at the shop. The move will involve heads of business lines, including investment banking and country heads. Local reports surfaced Thursday suggesting Antonio Quintella, CEO of Brazil, has been named head of EM, but bank executives familiar with the process say that is not correct, and that he, as well as several other heads of EM countries, will be part of the committee. A spokeswoman declines to comment.
IMF Comes Through for Jamaica
The IMF has approved a 27-month $1.27bn stand-by agreement (SBA) for Jamaica, of which $640m will be made available immediately to establish a financial stability support fund. The funds aim to support Jamaica’s reform program to address deep-seated structural weaknesses in the economy, increase its growth potential, and make it less vulnerable to external shocks, says the IMF. The SBA is expected to generate about $1.10bn in finding from other international financial institutions. In addition, Jamaica closed Wednesday a JAD700bn ($7.86bn) exchange offer to holders of 350 different classes of domestic securities, with final results due out next week that are expected to show an acceptance rate of over 95%, according to an official familiar with the process. Burdened with costly interest rates, the government offered holders a par exchange for bonds with lower interest rates and longer maturities. The maturity extension should be an average 2.5 years, with interest rates lowered from an average of 18%-19% to 12%, according to ratings agency and sell-side analysis. The government claims the operation will save JMD40bn annually in interest payments. Citi managed the process.
DomRep, Vene Get IDB Loans
The IDB has approved a $100m loan for the Dominican Republic to help build 34 schools, refurbish more than 200 schools and stock classroom libraries. The loan is for a 25-year term, including a 5-year grace period, at a Libor-based interest rate. The government of the Dominican Republic will provide $10m in local counterpart funds. Separately, the IDB has approved a $50m loan for Venezuela to improve drinking water service quality. The government will provide $25m in local counterpart funds, taking total funding for the program to $75m. The IDB facility will have a 25-year term, with a 5-year grace period, at a variable interest rate based on Libor.
UBS Adds in DCM, Sales
UBS has hired ex-Citi banker Carlos Corona for its LatAm DCM team and Rod Eichler, ex-RBS, for its EM debt, currency and derivatives sales group, according to an official at the bank. Corona started this week as executive director and senior originator on the DCM team reporting to Mark Tuttle. He was previously with the LatAm loans group at Citi. Eichler will join the debt, currency and derivatives sales group in April, reporting to David Cannon.
Peru Securitizer Preps Debut RMBS
Titulizadora Peruana is presenting investors this week with its first ever mortgage-backed security offering. The deal for up to $35m should price in the next 2 weeks, says Jefferson Ganoza, director of structured finance and risk management at Titulizadora. The 20-year paper, backed by mortgages from BCP and Interbank, has an average life of 9 years and will pay a fixed rate. The bond is dollar-denominated to match the currency of the loans. About 60% of Peru’s $4.5bn mortgage market is dollar denominated, Ganoza says. Subordinated bonds will represent about 6% of the issuance. BCP’s Credibolsa unit and Inteligo are placement agents for the deal, rated AAA on a national scale.
EPM Awaits Deal Nod
The telecom unit of Colombia’s Empresas Publicas de Medellin has submitted its plans for a bond issue of up to COP1trn ($504m) to the local regulator for approval. A company spokesman says that the exact amount to be issued and terms have not yet been determined. He adds that proceeds will be invested in new technology and company growth. BRC Investor Services has given the issue an AAA rating.
EMP Financing Palm Oil Company
Washington DC-based investment fund manager EMP Global is extending $17m in financing to Mexico palm oil producer Promocion e Industrializacion de Palma (PIP) and subsidiary Propalma through its CentAm Mezzanine Infrastructure Fund (Camif). The financing, structured as a long-term mezzanine loan, will allow the company to consolidate its ownership of Propalma and other operating companies and also will provide resources for the company’s expansion. Creel García-Cuellar Aiza y Enriquez acted as counsel to Camif, with Covington & Burling acting as special US counsel. Olea Abogados was counsel to PIP.