Fitch has revised the outlook on Banco de Credito de Peru to positive from stable and affirmed its IDR ratings. It also upgraded its individual rating. Fitch says BCP’s ratings reflect its “dominant franchise, important market share across all segments, broad, low cost deposit base, diversified loan portfolio, improved asset quality and adequate reserve coverage. BCP’s systemic importance, improving efficiency and the depth and breadth of its management also support its ratings.” Fitch affirmed BCP’s foreign and local long-term currency IDR ratings at BBB minus, its foreign and local short-term currency ratings at F3.
Category: Daily Brief
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Bradesco Shutters Prop Desk
Bradesco has restructured part of its investment banking unit BBI and done away with its treasury desk, say people close to the matter. BBI’s nascent fixed income and proprietary trading desk, launched close to a year ago and headed by Patrick Gontier, has been closed down, with some of its assets and personnel having been tucked into BBI, say the market sources. Gontier has left the firm, though on what terms is unclear. Luis Galvao, head of BBI’s equities business, is now in charge of both fixed income and equities. BBI and its Bradesco Securities unit remain otherwise intact, say people at the firm, despite rumors in the local market of a broader retreat. BBI began operations as a standalone entity within Bradesco in early 2007. It has secured mandates in project finance, M&A, fixed income and even IPOs, though it still lags its competitor Itau BBA in every major category in local investment banking. Jose Luis Acar, who took over the unit following Bernardo Parnes’ departure to Deutsche Bank earlier this year, heads BBI.
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Goldman Reshuffles LatAm Brass
Goldman Sachs has made some adjustments to the top tier of its LatAm investment banking operation, according to an internal memo sent to employees this week. Confirming a November 6 LatinFinance report, Eduardo Centola has been removed from the Brazil investment banking operating committee and is no longer co-head of LatAm investment banking. He will now focus on client relationships in the region, according to the memo. The Brazil committee, which he was formerly part of, is now made up of Andy Rabin, Antonio Pereira and Daniel Wainstein, according to the note, signed by Kevin Kennedy, New York-based head of LatAm. All three report to Mexico-based Martin Werner, who is now sole head of LatAm investment banking, and Valentino Carlotti, president of the Brazil bank. No mention is made of Ana Cabral, co-head of Brazil ECM who has been rumored to have been moved aside. The memo demonstrates Goldman is seeking to center its decision-making with a small group of managing directors, and suggests the bank has no immediate plans to exit Brazil or the region.
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Vale Swallows $1.4bn Subsidiary
Brazilian miner Vale is acquiring its wholly owned subsidiary Mineracao Onca Puma, in the northern Brazilian state of Para. The company said in early 2007 that the project commands an investment of $1.4bn and focuses on nickel extraction. Vale says the point of the merger is to simplify the company’s corporate structure, improve resource allocation and cut costs. Vale shareholders will be asked to approve the maneuver.
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Itau, Unibanco Unveil Merger Terms
Itau and Unibanco have released terms of their proposed merger, to be voted on at a shareholders meeting on November 28. At current values, the proposed share exchange ratio values Unibanco at BRL29bn. The deal boosts Itau Holding’s capital base by BRL12bn to BRL29bn, according to the company statement. Shareholders of Unibanco will receive one common share in Itau Holding for every 1.1797 Unibanco ordinary share and one Itau Holding share for every 3.4782 Unibanco preferred shares they hold. Rothschild provided Unibanco with a fairness opinion while Morgan Stanley gave the same for Itau.
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IDB Approves $70m Loan to Uruguay
The IDB has approved a $70m loan for Uruguay to be used to regularize and improve 25 informal settlements and two semiformal areas, benefitting more than 7,300 households. The loan has an amortization period of 25 years, a grace period of 5 years and a variable interest rate.
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Panama Canal Locks in Funds
The IFC has approved a $300m 20-year loan to the Panama Canal Authority’s (PCA) expansion project. The PCA said in October that it would borrow $2.3bn from 5 multilaterals, clinching the funds as other infrastructure projects in the region see delays. “Multilaterals are very liquid, and they can play a role in making sure infrastructure financing doesn’t completely disappear this year or next year,” Vincent Gouarne, the IFC’s director for subnational finance, tells LatinFinance. “They will have to be selective. This [financing] is very significant, signaling that a project of this quality should happen come hell or high water.” Gouarne says the project is the most solid the IFC has seen in a long while. Despite a possible drop in shipping traffic next year, he says it is robust in terms of starting the project without leverage and with significant cash reserves. “We specifically erred on the side of providing longer tenor than necessary, so they have flexibility,” Gouarne says. He also notes the contingencies factored into the potential cost overrun were based on commodities prices being much higher than they are now. Gouarne did not disclose the rate on the IFC’s loan, but PCA CEO Alberto Aleman said in October that it will pay an average effective interest of 5.48%, with spreads over Libor on the different loans in the package of 48bp-120bp, stepping up to 140bp. The $2.3bn package has a 10-year grace period and breaks down into $800m from JBIC, $500m from the EIB, $400m from the IDB and $300m each from the IFC and CAF. Mizuho is financial advisor to the PCA.
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PE Scents Brazil Bargain
With valuations dropping for the first time in years, Brazil is ripe for a wave of private equity deals in 1H09, provided owners can be convinced to part with assets for less. “You have good companies whose values have dropped by a factor of six or seven,” Daniel Miranda, partner at Mattos Filho Advogados, tells LatinFinance at a Brazil private equity panel in New York. “Valuations have come down so much, there is no sector that’s off limits,” he adds. Specifically, infrastructure – energy, transportation, oil and gas – are attractive, says Luiz Eugenio Figueiredo, partner at Rio Bravo Investments. All sectors offer opportunities, as long as you can find owners ready to make deals at prices they have not seen in a long while, he adds. Shortage of cash should not be as much of a problem as in other markets, finds the Thursday panel, which was sponsored by the Brazilian-American Chamber of Commerce. “There are lots of funds raised and ready to spend,” says Duncan Littlejohn, MD at Paul Capital Partners, who cites AIG, Gavea, GP and Advent as examples. First-time investors may be more challenged, especially if they have fundraising requirements. However, PE is not that levered in Brazil, Miranda explains, so financing is not as imperative as it was for acquisitions in other markets in the past few years. In fact, the overall lack of funding makes PE capital all the more attractive to local firms, he adds.
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Capital Gold in Talks to Acquire Juniors
Capital Gold executive vice president Jeff Pritchard tells LatinFinance that his company is in informal talks with about 10 junior mining exploration companies in Mexico. Although he cannot say for sure if Capital Gold will end up making an offer for any of them, the company is interested in buying exploration outfits whose projects can go to production in 2 years. On the other hand, Pritchard also confirms that Capital Gold has been approached by larger mining companies interested in acquiring it as a bolt-on acquisition to beef up operations in northern Mexico. However, given volatility in the company’s share price, Pritchard would rather wait before selling. Capital Gold has a market cap of about $70m. Shares have slid from a 52-week high of 79 cents to 36 cents November 11.
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Autlan Looks to Buy
Minera Autlan, the Mexican Manganese miner, is on the lookout for acquisition targets, say company executives. While declining to comment specifically on the strategy for non-organic growth, an Autlan official confirms what he said in September following the company’s decision not to sell itself in an auction to global mining companies – that Autlan would rather be a buyer than a seller. “We’re not closed to new M&A opportunities,” says the executive. “Given the strong decrease in the valuations of companies in the mining industry, Autlan is considering some acquisitions,” says Banif-Ixe, in a late October report. “Targets would include not only manganese ferroalloy producers, but also some other ferroalloy assets. Additionally, it is analyzing whether to buy a mining company or a smelter/refining facility,” adds the shop, noting the company is considering raising around MXP3.5bn for big ticket capex. If that were raised in the debt market, it would imply a net debt to Ebitda of 1.0x, says Banif-Ixe. An Autlan executive declines to comment on specifics, saying funds could be raised in either debt or equity markets, but that today’s market is not conducive to new issues.