The IDB has agreed provide $2.8bn in financing through three facilities to boost liquidity in the Mexican mortgage and housing sector, it says. It will provide a 10-year $2.5bn sovereign-guaranteed credit line to Sociedad Hipoteca Federal, the first disbursement of which will be a $500m 25-year loan paying a spread over Libor. In a separate, part of the package, the IDB will offer up to $150m equivalent in pesos to eligible Mexican mortgage lenders, following a similar $150m facility brought by the IFC in October. Through the facility, the IDB can provide mezzanine credit support via partial credit guarantees or purchases of mezzanine notes by way of a loan to a trust. It is also able to finance the purchase of up to 15% in RMBS though a loan to a trust, and provide an unsecured loan to a fund providing supporting lenders. Finally, the IDB will make available a $185m loan facility to state-backed lender Infonavit, to support mezzanine portions of its RMBS issuance. Both the $150m and $180m non-sovereign guaranteed loan facilities are available for 3 years, renewable for another 3.
Category: Bonds
IDB Tightens Corporate Screws
Private sector companies and projects hoping to tap into IDB funds are more likely to be told no in the coming year as demand for the multilateral’s balance sheet soars. Faced with a substantial rise in requests from sovereigns, the IDB will be even more selective in evaluating projects, favoring those that meet stringent development criteria, says an official at the lender. Governments will likely have priority access, reducing the pool available to corporates. However, people at the institution note that the total budget will increase some 20% in 2009. “It’s going to be a complicated, ongoing allocation process in the coming year,” notes an IDB executive, who adds that there is no blanket rule or country limit to determine allocation. Among the IDB’s biggest clients in the region are Colombia, Peru, Brazil, Chile and Panama. IDB president Luis Alberto Moreno said this week that the multilateral will likely lend some $12bn in the coming year, with an additional $6bn coming from an emergency lending facility destined for sovereigns only. That is up from the $9bn-$10bn expected in 2008. The IDB’s private sector division, whose deals can account for no more than 10% of the IDB’s total loan exposure at any given point, approved $2.2bn in loans in 2007. The figure for 2008 is likely to have risen, say bank officials, who decline to specify volume. The IDB has played a major role in providing funds for projects and companies across the region. As needs rise and capital markets remain shut, a reduction in multilateral funds creates added woes for the private sector. Other multilaterals are expected to follow suit with a pullback from corporates, say bankers.
Investment Bank Fees Plummet
The LatAm investment banking fee pool has shrunk dramatically this year and further contraction looks inevitable in 2009. Total fees for M&A, ECM and DCM are down 46% so far this year, which is now all but closed for capital markets activity, Dealogic data shows. In the year to November 17, LatAm bankers made $1.069bn in fees from the three core activities, little over half the $1.979bn they had accumulated in the corresponding period of 2007, according to Dealogic. Credit Suisse dominates, with $226.33m in fees, or 21.16% market share, down 38% from last year’s $370.51m (18.72% share) bonanza. The top 5 claims almost 60% of the pool and includes UBS, Citi, Itau and JPMorgan, the same – along with Credit Suisse – as last year’s leading quintet. M&A is the bright spot, with the top 10 advisory shops seeing revenue grow compared to the corresponding period of 2007. Dealogic data reveals total revenue of $479m as of November 17, up from $442m in 2007. Credit Suisse bags the bulk of the M&A pool, with $105m, or a 21.88% share. Last year the top earner was Citi, with $114m in revenue, or a 25.86% share. Next year will almost certainly be worse, senior investment banks at the top firms tell LatinFinance. ECM and DCM will be closed at least for the next few months, and most bankers expect few transactions until the second half of 2009 or later. The outlook for M&A is more constructive, but this is unlikely to pick up the slack of other markets. Banks hope to compensate by diversifying into lucrative liability management and restructuring advisory, but more downsizing looks likely as they adjust to a much leaner revenue panorama.
IDB Lends $60m to Jamaica
The IDB says it is lending $60m to Jamaica. The loan is for a 20-year term with a 5-year grace period at a variable interest rate. The funds will be used to finance a reform program to improve efficiency of public expenditure by strengthening fiscal discipline and modernizing its public financial and performance management practices.
IDB Lends $20m to Nicaragua
The IDB has approved a $20m loan to Nicaragua. The loan includes a $10m financing for a 30-year term at a 5.5-year grace period at a variable interest rate and a $10m financing from the fund for special operations for a 40-year term and grace period at an interest rate of 0.25%. Nicaragua’s Ministry of Agriculture and Forestry will carry out the program, which aims to improve the skills and access to technology of farmers.
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.
Deutsche Appoints New LatAm DCM Head
Carlos Mendoza will head up Deutsche Bank’s LatAm DCM desk, LatinFinance has learned. The director in the DCM group joined Deutsche in 1998 but left in late 2005 to join Merrill Lynch. He returned to the German shop roughly 18 months ago and has been doing general coverage since then, including Mexican capital markets. Deutsche is apparently not looking to scale back its regional DCM platform in line with a sharp contraction in volume. It is expected to leverage its established liability management franchise at a time when borrowers are in significant need of such a service.
IDB, Banobras Lend to Mexico Infrastructure
The IDB has approved a loan of $350m for Mexican infrastructure and public services projects, the first from a $1.2bn line of credit. Funds will be disbursed through development bank Banobras to Mexican state and municipal governments and public service providers to finance priority investments in infrastructure, public services and strengthening institutions. The $350m loan is for 20 years, with a 5-year grace period and an undisclosed Libor-based interest rate. Banobras will use the IDB funding to supply medium and long-term loans and credit guarantees, as well as technical assistance. In order to finance small-scale projects such as potable water systems, street lighting or road paving in rural municipalities, Banobras will also be able to rediscount its own portfolio using funds from the IDB loan.
IDB Lends $45m to Mexico
The IDB has approved a $45m loan to the Mexican government of which the local counterpart will contribute $10.4m from sales tax revenues. The loan has an estimated disbursement period of 54 months and a Libor-based interest rate, the IDB says. The funds, says the bank, will be used to improve the quality of public expenditures through the implementation and consolidation of a new results-based budgeting system.
IDB Signs Loan Package for Brazil
The IDB has agreed a conditional 20-year credit line worth up to $500m for Brazil to finance a program to help states modernize and integrate their fiscal, financial and asset management systems. Ceara will be the first Brazilian state to benefit, with a $41m 20-year loan that has a 4-year grace period. The credit line, will be available to the Brazil government for 10 years and will fund training, consulting services, reform and upgrading of operational and taxpayer service units, as well as the purchase of equipment such as information technology hardware, systems and materials.