New York-based BlueOrchard Finance, which recently teamed up with multilaterals MIF, OPIC and IIC to establish a $250m Microfinance Growth Facility to make small loans in the region, could expand in LatAm, says MD Ann J. Miles. “Over time we will consider increasing [our exposure] to LatAm in proportion to fund allocations,” she tells LatinFinance. “We are always examining opportunities to expand in LatAm and are working on another initiative with smaller microfinance institutions in LatAm, Africa and Asia,” she adds, explaining that the average size of loans her institution offers is $1,000-$1,500. Another company focused on microfinance, Bangladesh-based Grameen Bank, is also expanding in LatAm. It recently launched a microfinance bank, Grameen Carso, in Mexico with Mexican tycoon Carlos Slim. Vidar Jorgensen, president of Grameen America, tells LatinFinance that the Mexican bank is starting out offering $5m in grants and $40m in loans. Grameen, which also has operations in Guatemala and Costa Rica, might also expand to other parts of the region. “Other countries in LatAm have expressed interest,” he says. Another bank that has delved into microfinance is Banco del Credito de Peru, which recently purchased Financiera Edyficar from humanitarian organization CARE for about $100m in cash.
Category: Bonds
Costa Rica Airport Revamp Bags Financing
The consortium that has taken over the renovation project for Costa Rica’s Juan Santamaria airport in San Jose expects to get $100m in financing in November from the IDB and OPIC, says Paulo Monteiro, finance manager at Brazil construction company Andrade Gutierrez Concessoes (AGC). The consortium in charge of renovations is made up of AGC, Canada’s Airport Development Corporation (ADC) and Houston Airport Services (HAS), which runs 3 airports in Texas. Monteiro tells LatinFinance that of the $100m, the IDB will provide $45m and OPIC $55m. He expects the loans to have a 15-year term with a 2-year grace period. To take over the renovation, the consortium had to pay down the IFC loan, hedge contracts, and fines imposed on the leaders of the consortium previously in charge of this project, Bechtel and Chiangi. To do so, it had to get a $43m loan, Monteiro explains. Of that $43m, AGC was able to get half from Portugal’s Banco Espirito Santo, while ADC and HAS got the rest from Canada’s TD Bank. The new $100m loan will go to pay down the loans and to cover capex to finish the renovation. Monteiro says he hopes the consortium will be able to work on the next phase of the revamp, expected to start in 2014 or 2015 at a cost of about $140m.
Brazil Gets IDB Loan
The IDB has approved a $28.6m loan to Brazil to help modernize the country’s federal government improve the quality and management of public expenditure. The Brazilian government will provide $20.4m in counterpart funds to help finance the program. The loan, from the bank’s ordinary capital, will be disbursed over a 4-year period. It is for a 20-year term, including a 4-year grace period, and carries a variable interest rate based on Libor.
CAF, China Close to Loan Management Pact
CAF and the China Development Bank (CDB) are planning to sign loan management agreement, with a formal announcement expected this month. “We are presently working on expanding our relationship with the CDB. We discussed loan management and agreed it was a good idea to pursue,” CAF CFO Hugo Sarmiento tells LatinFinance. He says it is too early to give any specific details, but a memorandum of understanding should come “in the next few weeks.” CDB, the Chinese government’s main means of lending abroad, and has this year signed LatAm loans including $10bn for Petrobras and $1bn to America Movil. CDB is planning to open a Rio de Janeiro office as soon as 2010.
Spirits Brighten at Istanbul IMF
Issuers, bankers and EM investors gathered in Istanbul over the weekend for the IMF annual meetings note a dramatic improvement in sentiment since the March IDB conference in Medellin. However, market veterans worry that over exuberance willl create a new bubble. “We are now seeing signs of the beginning of global economic recovery, as well as improvement in the functioning of financial markets, but the situation remains fragile,” says Deutsche Bank chairman Josef Ackermann. “There are valid questions about the durability of this recovery,” says Citi senior vice chairman Bill Rhodes. “We need to be highly mindful of the risks to securing the restoration of healthy banking flows.” The pair was speaking at a forum organized by the IIF, which predicts a rebound in capital flows to LatAm next year to $166bn from $122bn this year and $147bn in 2008. Capitalizing on the mood, LatAm bankers are eagerly pitching new issues and liability management, while previously shuttered financing options like euros are back on the table. And in just 6 months, issuers have gone from crisis management and plain vanilla multilateral lines to higher quality problems. “It could again become a recurring source of funds for non-European sovereigns,” Mexico’s head of public credit Gerardo Rodriguez tells LatinFinance, speaking of euros. Last week’s Pemex euro deal reopened the door and other high grade LatAm names like CAF are also heard weighing the European investor base. Mexico – typically one of the most sophisticated sovereign issuers – is also courting foreign investors to participate in the peso bonos market. “I see a lot of potential there in terms of involvement in the local market,” says Rodriguez, speaking of the Asian buyside. Analysts say that most of the risk for the larger LatAm economies is external. However, Brazil’s euphoria over winning the Olympics bid compounds the fear that some participants may get carried away. “There’s risk there, but it remain
Jamaica Highway gets IDB Loan
The IDB has approved a $70m facility to Bouygues Travaux Publics and Autoroutes du Sud de France to expand and upgrade the Transjamaican Highway, which links Kingston to western suburbs and central regions of Jamaica. An IDB spokesman declines to provide the loan’s maturity.
Multilaterals Team Up for Microlending
The IDB’s MIF, OPIC, IIC, Swiss microfinance investment management company BlueOrchard Finance and other international investors have joined forces to establish the Microenterprise Growth Facility (Migrof), which will provide up to $250m in funds to microfinance institutions in LatAm and the Caribbean. Migrof intends to offer medium- and long-term financing both in local currency and in USD, and is aiming to distribute an average of 35% of the total pool in the form of local currencies. It is expected to begin its lending activity in early 2010.
Colinversiones Gets Multilateral Support
Colombian power plant holding company Colinversiones is getting $150m in financing from the IFC, CAF and DEG to build the Flores IV project, which will increase the plant’s power generation capacity by 38% to 610 MW. The total cost of the project is estimated to be $188m. The loan matures in 11 years. CAF’s participation in the deal totals $62.5m; the IFC’s is $62.5m, and DEG is lending $25.0m.
Deutsche Expands DCM Team
Senior DCM banker Andre Silva is expected to start at Deutsche Bank mid-October as co-head of LatAm DCM. The former Sao Paulo-based JPMorgan DCM head will work alongside Carlos Mendoza as the other co-head. The move is seen as a loss to JPMorgan, which has had a very strong year so far in LatAm DCM. Deutsche Bank earlier this year bolstered its LatAm franchise by tapping Merrill Lynch bankers Alberto Ardura to head LatAm DCM and client coverage, and Karan Madan as head of EM for LatAm.
CAF Looks to Niche Markets
Andean development bank CAF is preparing to finish up its borrowing for the year with possible domestic currency taps in Peru, Uruguay and Venezuela. “We have a mandate to issue in the local markets,” CAF CFO Hugo Sarmiento tells LatinFinance. He adds that CAF met most of its needs with a $1bn 8.125% of 2019 dollar bond issue in late May. “Obviously these are not large markets, but there are arbitrage opportunities after swapping into dollars,” says Sarmiento, without giving specific expected sizes for each. Regarding quasi-sovereign issuance, Sarmiento explains it is not as easy to do this in Venezuela as it is in other markets, but he says the bank is having a “very good dialogue” with the government. Dealing with Peru and Uruguay is a more straightforward process, he adds. He expects to have issued in at least two of the three local markets by the end of the year. He says CAF expects 18% loan growth in 2009, up from previous expectations of 8%. CAF delegates were in Beijing attending LatinFinance’s Latin America China Investors Forum last week.