Brazil’s central bank is expected to keep its monetary policy rate on hold at 8.75% today. Morgan Stanley says that it is likely to hike this year, but is not in a rush. “Shrinking slack in the economy and rising inflation expectations can eventually force the hand on the monetary authorities,” it says. “However, the bank is likely to wait for a few more months to assess where growth settles after the initial rebound from recession,” it adds. Bulltick meanwhile believes Brazil may tighten 150bp by the end of the year starting in Q2. Standard Chartered predicts a first rate increase of 50bp in March. And Goldman expects Copom to wait until April to initiate the tightening cycle, though it sees a risk of moving in the month before. A central bank survey shows consensus estimates are for the rate to reach 11.25% by year-end.
Category: Daily Brief
Chile Seen on Positive Ratings Trajectory
A positive rating action is a possibility for Chile, says Shelly Shetty, senior director of Fitch Ratings. “In the single A category, there is scope for Chile to move up,” Shetty tells LatinFinance. She notes that the sovereign’s debt-to-GDP ratio is low compared to the median of A rated countries. In addition, she says the scope to upgrade the sovereign above its existing A rating depends on president-elect Sebastian Pinera delivering on promises related to reforms in labor, as well as improvements in the country’s education sector. Another country she sees on a positive path is Panama, which she says has manageable financing needs but warns that its debt burden is higher than that of the BBB median. She expects Panama’s GDP to grow 4% in 2010, the highest rating in LatAm for the year. Uruguay, rated BB minus, also has a positive outlook due to its high liquidity. Shetty believes Uruguay will benefit from Brazil’s growth and positive FDI inflows this year. Suriname is also on a positive rating path, adds Shetty.
Panama Remittance Exports Rising
Panama is building on its new role as a net exporter of remittances with a 14% year-on-year increase in money transfers abroad last year. According to statistics from Panama’s ministry of commerce and industry, in 2009 outgoing remittances totaled $230m, up from $201m in 2008. During the same period, the country saw an 11% decrease in incoming remittances. In 2009 they totaled $167m, down from $187m the previous year. Colombia and the US are the main beneficiaries of Panama’s remittance outflows, while the US remains the major source of inflows.
Pemex Appoints New CFO
Mexican oil company Pemex has named Carlos Trevino as its new CFO. Trevino was previously the general director of programming and budgeting at the expenditure office of Mexico’s treasury department. He replaces Esteban Levin, who will become the company’s corporate director of management. The company also created a new department, the corporate direction of information technology and business processes, and appointed Mauricio Galan as director. The appointments are effective February 1.
Credit Agricole Selling Uruguay Bank
French bank Credit Agricole says it has entered into exclusive negotiations to sell Credit Uruguay Banco to Spain’s BBVA. The divestment is part of Credit Agricole’s strategy to focus on banking operations in Europe. The seller does not say how much BBVA is offering for the bank. Credit Agricole has 36 branches in Uruguay and says that at the end of 2009, it held approximately $1.25bn in assets and $1.17bn of liabilities. Besides Uruguay, in LatAm Credit Agricole has operations in Brazil, Argentina, Chile and Venezuela.
Japan Scrambles for Raw Materials
The Japan Bank for International Cooperation (JBIC) has signed a $245m loan for Chile’s Minera Los Pelambres to finance expansion. The lender says it is responding to a need from Japanese firms to secure a long-term and stable supply of resources. “In the face of pressure due to a sharp increase in copper concentrate demand in the People’s Republic of China and Republic of India, Japan is increasingly urged to secure copper concentrate,” says JBIC. It adds that it will keep providing financial support to facilitate the development and acquisition of strategically important resources through project structuring and risk-taking functions that draw on its various financial facilities. The borrower aims to boost capacity at the Pelambres copper mine by approximately 370,000 tons of concentrates annually, starting in Q1. Japanese firms will take delivery of approximately 180,000 tons from this increased portion. Los Pelambres is 60% owned by Antofagasta alongside Nippon Mining & Metals Co, Mitsubishi, Marubeni and Mitsui. In May, JBIC provided a loan for the Esperanza project, owned by Antofagasta (70%) and Marubeni (30%).
Metalfrio Nixes Equity Plan
Brazilian fridge and freezer maker Metalfrio has filed an official statement withdrawing its plans to issue shares in a follow-on of 31m shares that would have raised it BRL341m at Tuesday’s closing price of BRL11.01. The deal was slated to include 17m primary shares and 14m secondary shares. Credit Suisse, Itau BBA and Morgan Stanley have the leads for the pulled deal. In a statement with the CVM, says it will remain focused on developing further synergies from earlier investments, keep an eye out for market opportunities and cash management, obtain new clients and grow its business. It does not suggest an M&A deal is in the works.
Aliansce Tests IPO Waters
Aliansce is set to price an IPO today, marking the first new equity deal of the year and the end of a drawn out filing period for the Brazilian shopping mall manager, which first resubmitted plans to issue last September. The company had initially hoped to issue in 2007 to raise around BRL330m. Today’s offer could generate around BRL1bn if done at the midpoint of the BRL10.00-BRL13.00 range, and all of the greenshoe and hot issue shares are placed. Itau BBA, BTG Pactual, JPMorgan and Bradesco BBI are leading the trade, with pricing expected late Wednesday.
BA Province Rolls Out Short Package
Argentina’s Buenos Aires province government plans to sell up to ARP2.5bn-equivalent ($657m) in local bonds of up to 1-year in tenor to fund its 2010 budget. The government plans 16 auctions this year, beginning today, according to Moody’s, which rates the program A3 on a national scale. Sales can be in ARP or other currency. The agency notes “economic uncertainty and cost pressures” facing the regional government, which has been reflected in weaker financial performance since 2005.
Eletrobras Generates Debt Options
Eletrobras is evaluating its funding options following the unveiling of a plan to pay BRL10.3bn in long overdue dividends. “Eletrobras will execute its funding program of $2.0bn for 2010 by tapping either the bond market, loan syndicated market and/or multilateral agencies,” a finance official at the company says. “We expect that shortly we will be reaching a decision to which alternatives to pursue,” he adds. LatAm DCM bankers expect an RFP for a new bond as soon as February. The state-controlled utility sold $1bn in 6.875% of 2019 bonds in July through Credit Suisse on the back of $6bn in orders. That deal – Eletrobras’ first in 4 years – followed a long selection process in which the issuer was said to have awarded the job solely on lowest fees, pushing the commission into single digits.