Bank of New York Mellon has appointed Rene Boettcher as chairman of the LatAm region. He will continue to serve as head of client management for LatAm, reporting to Bill Williams, head of developing markets client management. Karen Peetz, chief executive officer of financial markets and treasury services, will be the executive committee sponsor for Latin America. Boettcher joined BoNY’s depositary receipt business in 1996. The following year he moved to Brazil to become country manager for depositary receipt and corporate trust-related sales and relationship management efforts. He returned to New York in 2005 to head sales and marketing for LatAm within the depositary receipt business. In January 2007, he became head of client management for LatAm. “International expansion continues to be one of our strategic priorities, and Latin America is a region that is host to some of the fastest developing economies in the world,” says Robert Kelly, BoNY’s chairman and CEO. The bank has rep offices in Brazil, Mexico, Chile and Argentina and holds a banking license in Mexico. It recently completed the acquisition of ARX Capital Management, an asset management business in Brazil.
Category: Daily Brief
McBains Cooper May Expand to Brazil
UK-based infrastructure, construction and property consultancy McBains Cooper intends to open offices in Brazil next year, says partner Santiago Klein, adding that the firm may seek a joint venture partner. The firm recently opened offices in Lima and Mexico City. In addition to property, it will focus on developing infrastructure projects within both the private and public sectors, with a specific view to getting long-term concessions contracts.
Moody’s Chops Homex’s Outlook to Stable
Moody’s has chopped Homex’s rating outlook to stable as banks and mortgage Sofoles and Sofomes curtail mortgage origination targets and tighten underwriting criteria, pressuring clients for middle and higher-income homes. The agency expects these market challenges to continue to negatively affect Homex’s operations, growth, margins and efficiency measures. Moody’s also affirmed its Ba3 rating for the company’s senior unsecured debt and global scale local currency.
Telmex, EPM Potential Bidders for ETB
Telmex, Telefonica and EPM, majority owned by Empresas Publicas de Medellin, are possible bidders for Bogota-based telecom company ETB, say two Colombian analysts from different firms who ask not to be identified. ETB, which in late October hired Santander Investments to explore strategic alternatives, is more likely to sell a stake rather than the company as a whole, believes one analyst. By acquiring ETB, says the other analyst, the three potential bidders would greatly expand their penetration in Colombian broadband, as ETB has a 32% share of that market. Telefonica and EPM each have a 19% share, while Telmex has 14%. Juan Carlos Alvarez, MD at Santander, tells LatinFinance that although strategic alternatives for ETB are still being evaluated and that no recommendation has been made to ETB yet, a sale of a stake or of the company as a whole is being considered. “We will know in about 3 months if that is the best alternative,” he adds.
D&C Hires Credit Suisse
Dyer Coriat Holding, which holds 32.65% of Copeinca, and Luis Dyer Ampudia Osterlin and his family, who currently hold about 9% of the shares of Copeinca, say they will explore various strategic alternatives with regards to their shares in Copeinca. The company told Conasev that it hired Credit Suisse. Copeinca trades on the Oslo Bourse and, since August, on the Bolsa de Valores de Lima. Copeinca is a leading fishmeal and fish oil company in Peru.
Monsanto Completes Brazil Buys
Monsanto has completed the acquisition of sugarcane biotech company Aly Participacoes for $287m. Aly is the parent company of CanaVialis and Alellyx. The legal advisor for the target was Shearman & Sterling, according to Dealogic. The deal was first announced early November.
CS LatAm Seen Immune From Further Cuts
Credit Suisse’s LatAm operations will not be impacted by the latest round of cuts announced globally at the Swiss bank, a spokeswoman says. Brazil reductions were made in the last round of job cuts and more are not planned, she adds. The same applies to other parts of LatAm, and the shop affirms its commitment to its Bogota office, which was set up this year to boost the Andean presence. “Of what was announced, there should be little to no impact,” says the spokeswoman. Credit Suisse in late October made substantial cuts to its Brazil team. Among those departing the investment banking group led by Jose Olympio were Rafael Pagano, head of Brazil ECM, Enrico Carbone, a director covering real estate and technology, and Marcio Guedes, who covered the consumer and agricultural sectors, say people close to the situation. Four others are heard to have been asked to leave the investment banking division, which was apparently staffed with 25-30 professionals in Brazil earlier this year. Also departing was Roberto Attuch, head of equity research. Credit Suisse said last week it was cutting 11% of the workforce, or 5,300 jobs after revealing a net loss of about SWF3bn in October and November.
EM FX Cheap But Don’t Buy It
Emerging markets currencies are undervalued, but now is not yet the time to buy and markets will likely remain volatile, say analysts. “From a valuation perspective, we think that emerging market currencies are very cheap, anything between 30% undervalued against the dollar, to 10%, pretty much across the board,” says Daniel Tenengauzer, head of global currencies strategy and EM debt strategy at Merrill Lynch. “Emerging market currencies are incredibly cheap,” Paulo Leme, head of EM economic research at Goldman Sachs. He adds that the dollar still has room to strengthen on deleveraging. “Is this the time to get in? I don’t think so,” says Leme. “Just as the emerging market exchange rate overshot when prices were rallying, I think they will overshoot on the downside,” says Joyce Chang, head of global EM and global credit research at JPMorgan. She adds that there are some benefits of weakness. Brazil, for example, every 10% depreciation in BRL has improved public sector debt dynamics by 1% of GDP. The three were speaking an EMTA event in New York last week. “Most emerging market currencies should remain under pressure until the outlook for global risk appetite stabilizes,” says Citi in a report issued Friday. JPMorgan predicts MXP11.50/USD by the end of 2009, Credit Suisse expects MXP13.00, Merrill MXP13.75, while Deutsche forecasts MXP14.50. They predict the following for BRL: 2.10 (JPM), 2.20 (CS), 2.15 (DB) and 1.90 (ML).
EM Buyside Knocks Sellside
EM investors see increasing counterparty risk in the markets and are critical of the sell side, particularly their research. “If you guys aren’t taking risk or providing liquidity, these markets are quite thin,” says James Barrineau, head of economic analysis at dedicated investor Alliance Bernstein, referring to the sell side. “This is a time when we are constrained as buyside investors due to this lack of liquidity, so a lot of the ideas, a lot of the effort that goes into sell side research is kind of wasted here,” he adds. Barrineau says his shop is hungry for “out of the box thinking” and that economists’ blogs can often replace sell-side research. Research has become too complex and compartmentalized, says Tulio Vera of Bladex Asset Management. “I find often a discontinuity between the desks and the research teams . . . research teams are providing ideas that are not necessarily very realistic from a relative value or from a liquidity point of view,” says Vera, who led EM macro and debt strategy at Merrill Lynch for 9 years. “That’s something I think that is going to have to come together somewhat better, especially as desks and teams both on the buyside and sell side consolidate more,” he adds. They were speaking an EMTA event in New York last week.
Chilean Macro Strength in Question
The global crisis is toppling LatAm economies like dominoes, and cracks are starting to widen in Chile, the region’s highest rated large economy. The country is reeling from a copper price plunge, and talk that it was discussing a contingent credit line with the IMF has raised further worries. Kasper Bartholdy, head of EM fixed income research at Credit Suisse, singles out Chile as an EM country with very large funding needs that trades at very tight spreads. And the private sector may also be storing up pain. “Chilean corporates have more short term debt than liquidity and it’s the only country in Latin America where you see that,” says Anne Milne, head of Deutsche Bank’s LatAm corporate bond research group. “The government has come out and said that they will make sure financing is available to any company, if it’s just a liquidity issue, but then again it’s a little bit surprising for Latin America’s strongest economy,” adds the analyst. However, Milne also notes that she does not expect problems in Chile. They were speaking at an EMTA event in New York last week. Separately, BCP Securities notes that Chile has one of the most impressive macroeconomic management teams in EM, as well as more than $80bn in international resources to meet its external obligations. However, the shop predicts that the current account deficit will to rise well beyond 2% of GDP in 2008, and could approach a shortfall of 5% of GDP in 2009, meaning a reduction in demand to stabilize external accounts. Moody’s last month put Chile’s A2 rating on review for upgrade, saying it is well positioned to manage upcoming challenges.