EM asset manager Ashmore has won a $670m mandate from HSBC Bank’s pension fund to invest in emerging markets, including Latin America. Ashmore’s Multi Strategy Fund invests in four underlying investment themes: dollar debt, local currency and local currency debt, special situations and equity. Ashmore has attracted state and city pension funds in recent years as they seek to boost returns in a low yield environment. Ashmore has been most visible in Latin America on the private equity side, snapping up power utilities across the region. Watson Wyatt advised the HSBC Bank Pension Scheme.
Category: Daily Brief
Posted inDaily Brief
Corporate BRL Issuance Seen Taking Off
Debt capital markets bankers expect issuance of global BRL-denominated bonds by Brazilian companies to take off in the coming several months, starting a new trend in local market financing. Ambev’s planned $500m issuance of 10-year global BRL-denominated bonds will be the first of a number of similar corporate deals, say executives. Petrobras is already mulling a deal, and others have received proposals by investment banks. In the past 18 months, several local and offshore banks have tapped BRL financing, but liquidity for those deals has been thin, and placing the notes has often been a challenge, with many of the bonds going to Asian and European retail accounts. But with the advent of big investment grade issuers on the scene, EM institutional investors are expected to take an active interest in new issues and secondary trading. Credit Suisse and Citi are leading the Ambev offering, which we expect to come in line with, or just above the sovereign.
Posted inDaily Brief
CVRD signs mining contract for Moatize
The government of Mozambique has awarded Brazilian mining company the 25-year mining contract to exploit the Moatize coal project, located in the northwestern province of Tete. The contract can be extended for additional periods of time, and establishes the tax, international trade and foreign exchange regimes that will rule the CVRD investment in Moatize. The project involves the exploitation of an open pit mine for 35 years, with an estimated average annual production of 11 million metric tons of coal products. Roger Agnelli, CVRD’s CEO, described the Moatize contract as an important step in CVRD’s coal strategy, but stated that CVRD must still reach an agreement on the costs for the projects logistics.
Posted inDaily Brief
EM Funds Slip
Emerging market debt funds fell 0.41% in the week ended June 28 as international and global income funds gained ground, ticking up 0.50% and 0.38% respectively, according to Lipper. In June, EM fudns lost a total 18.84%, bringing the year to date performance to 2.28%. In the previous week, EM funds posted at 0.58% gain, beating out international and global funds.
Posted inDaily Brief
HPDA Sets Sights On Monday Pricing
Argentine utility HPDA is expected to bring its $125m in10-year non-call 5 bonds today Monday, at 9.00%-9.25%, according to buysiders. The deal was expected to come by the end of last week but choppy markets resulted in the need for additional time. HPDA is the largest private hydroelectric generator in Argentina, and proceeds are being used to refinance debt from restructurings in 1999 and 2004. Merrill Lynch has sole books.
Posted inDaily Brief
LatAm Equities Lose Big
LatAm equity funds tracked by Lipper fell 1.94% in the week ended June 28, posting the biggest loss in all categories except for one – gold oriented funds lost 2.81%. Still, LatAm boasts the best year to date performance of all the funds tracked by the service, with a 25.57% gain so far, beating out China region Funds’ 24.75% and non-Japan Asia Pacific’s 20.25%. In June, LatAm equities grew 1.59%, compared to 8.62% for China region funds.
Posted inDaily Brief
Lupatech Takes Its Time
Brazil’s Lupatech, which makes parts for oil exploration companies like Petrobras, is looking to price $200m in 10-year perpetual non-call 5 bond, with guidance in the 10% area. The roadshow hit New York Friday, after an extensive Asian tour and stops in London. One banker said books for the Ba3/BB+ notes are likely to remain open indefinitely until market conditions stabilize, though the expectation is that pricing will occur this week or next. Bankers away from the deal said orders worth around $170m had been put in as of Friday. Citi and Merrill Lynch are leading.
Posted inDaily Brief
Milano Acquires Melody
Controladora Milano, Mexico’s largest discount clothing retailer, has acquired Melody, the leading women’s retailer in Mexico with an undisclosed financing package of debt and equity provided by Latin American private equity firm Advent International and Milano’s other shareholders. Banamex provided the debt financing. The value of the transaction was not disclosed. Combined, the companies have 2006 pro forma revenue of $382 million and operates more than 375 stores in over 125 cities in Mexico. Advent acquired Milano in May 2006 in the first mid-market private equity transaction in Mexico to use cash-flow-based debt. Over the last 12 months, Advent has funded three add-on acquisitions and made four new investments, including most recently Pronto!, a consumer credit company, and La Mansión, an operator of casual dining restaurants in Mexico. In Brazil, two of its portfolio companies have done IPOs recently: Brazilian bank Paraná Banco and duty-free operator Dufry South America, both of which floated on the Bovespa.
Posted inDaily Brief
Moody’s Concentrates on Governance in Loose Credit Climate
Moody’s Investors Service said that it will focus more on governance and management when assessing corporate issuers in Latin America because credit conditions are currently ‘benign’ in the region. Alexander Carpenter, chief credit officer for Latin America at Moody’s says, “Low leverage and high liquidity in the region make capital allocation decisions, and the process behind those decisions, key components of future creditworthiness.” Moody’s notes that there have been no Latin American defaults among rated issuers in the first half of 2007, but the ratings agency expects corporate issuance to accelerate in both local currency and foreign currency markets, with use of proceeds focused on liability management, acquisitions and, in the case of Argentina, refinancing of post-default debt.
Posted inDaily Brief
New Money into EM despite Volatility
Investment flow data tracked by ING showed no upset last week amid the widening fallout of the US subprime crisis. New investor money into EM debt and crossover high-yield was $143m, or 0.24% of assets under management for the week ended June 27, albeit $30 million lower than the $173m of net new inflows from the week before. Most of the new money went into EM local debt funds. “It remains a healthy sign of investor sentiment given that underlying asset prices dropped $529m, or 0.9% of assets under management, over the period,” according to an ING report. Crossover high-yield investor flows amounted to US$167m, similar to the $161m posted in the previous week.