The IDB’s Multilateral Investment Fund (MIF) says money transfers from LatAm and Caribbean migrants to their families back home are likely to stabilize in 2010. Remittances dropped 15% to $58.8bn in 2009, less than what was seen in 2006 and the first year-on-year decline since records started in 2000. “In the short term, significant recovery in the volume of remittance flows is unlikely, largely due to the uncertain outlook for economic growth in traditional remittances sending countries,” says MIF. “But the signs of stability of the last months could provide a basis for an estimate of stabilized remittance levels, or event the beginning of a new period of single-digit growth in the near future.” The fund says stabilization was already visible in 4Q09, suggesting a bottoming-out of the decline. Until 2009 the average annual growth had been 17%, although it started to fall in 2006 and diminished considerably in 2008, as the global economic crisis hit migrant employment and income levels in countries such as the US, Spain and Japan, according to MIF. Mexico, the largest recipient of remittances, suffered a 16% drop in 2009 to $21.1bn owing to US exposure. Central America saw a 9% decrease in remittances, while Brazil took a 34% hit, extending a trend that had started well before the global crisis. “Brazilian migrants have tended to return home, encouraged by their country’s improving economic performance and their dwindling prospects in host countries such as Japan,” says MIF. In countries like Haiti, Guatemala, Honduras, Nicaragua and El Salvador remittances still represent more than 10% of GDP, it adds.
Category: Bonds
CAF Invests In Peru Fund
CAF says it is investing $40m in a Peru-focused infrastructure fund managed by Canada’s Brookfield Asset Management and locally owned private equity shop AC Capitales. The fund, established in October, aims to raise $500m. Brookfield and AC Capitales have already committed $100m to the fund, which will mainly invest in transport, energy, water and sewage, communications and logistics.
GUEST COLUMN: Back to the Future?
IDB shareholders should use capital replenishment discussions to consider a re-alignment of their ownership. Borrowing countries need to recover a bigger voice.
Ex-RBS DCM Bankers Form Boutique
A former RBS DCM team led by Pablo Venturino has set up a new structuring and asset management business, White Bridge Capital Management. Based in New York and Buenos Aires, White Bridge will focus on 2 of the team’s specialties, trading and structured trades. It will also gradually venture into Asset Management, Venturino, MD and fund partner, tells LatinFinance. “Structuring was our bread and butter, and we knew that there was also an opportunity for us in trading,” Venturino says. The business will cover LatAm clients including governments, government institutions and banks, and involve various debt products and other instruments like swaps. Building asset management is a longer process. Thus far, a White Bridge Chilean Fund is being marketed to Argentine investors. It aims to take advantage of Chilean tax-exemptions to target several Chilean and international asset classes. It should close by the end of the year and is targeting up to $500m. The shop also has a special situations fund able to make a broad range of mostly short-term investments. Venturino is joined by former ABN/RBS bankers David Pinto and Orlando Alvarado, also as MDs. Hans Hertell, ex-US ambassador to the Dominican Republic, and Dario Ventimiglia, a former LatAm president at Telecom Italia, joined as fund partners. Professionals in the Buenos Aires office include former ABN LatAm energy head Mariano Gilles, as well as Alejandro Pueyrredon, Alexis Tchubarov and Ferdinand Porak. The BA office opened in January and the New York branch opened in August. A Venezuela office, targeting private banking clients, should also open this year. Venturino’s former team at RBS, which also included MD Carlos Vargas and director of loans Boris Espinoza, opted to take a buyout package in June. This followed deteriorating support for LatAm DCM and syndicated loans as the Scottish bank suffered through the credit crisis.
Jamaica Gets IDB Support
The IDB has approved a $45m in loans for Jamaica to enhance the country’s education system. A $30m loan will support improvements in school infrastructure and teacher training, while a $15m facility will be used to expand compulsory education to 18 years from 16 and to build 2 secondary schools for up to 2,100 students. The loans have a 20-year term, with a 5-year grace period on the larger and 3 years’ grace on the smaller. Another $30m loan is expected to be approved in 2012, the IDB says.
Jamaica Gets IDB Loan
The IDB has approved 3 loans totaling $170m for Jamaica to support private and public sector competitiveness and modernization. The loans are for a 20-year term, with a 5-year grace period, and carry a variable interest rate over Libor.
Ecuador Signs IDB Loan for Infrastructure
The IDB has approved a $350m loan to Ecuador to help finance the country’s infrastructure program, says the ministry of foreign relations. The 25-year loan has a 6-year grace period and an interest rate based on Libor.
Telefonica Gets ECA Funds for Network
Spain’s Telefonica has secured a $472m 9-year credit facility from Swedish ECAs to help it finance its European and LatAm 2G and 3G networks. The loan is priced at an undisclosed fixed rate and matures in 2019. Sweden’s export credit and export insurance arms SEK and EKN are providing funds and guarantees, while Citi and Deutsche Bank are the commercial lenders of record.
El Salvador Gets IDB Loan
The IDB has approved a $200m loan to El Salvador to finance a program aimed at improving public finances. The loan is structured in 2 tranches, each representing 50% of the total financing, subject to verification that steps have been taken to increase revenues, improve administration, boost the efficiency and equity of subsidies, and encourage transparency in fiscal management. It will be disbursed in 24 months and has an amortization period of 20 years, a 5-year grace period and an interest rate based on Libor.
Haiti Reconstruction to Cost up to $14bn
An IDB study calculates that it will cost between $8bn and $14bn to rebuild Haiti’s infrastructure, making the earthquake that hit the country in January proportionately the most destructive natural disaster of modern times. IDB economists Andrew Powell, Eduardo Cavallo and Oscar Becerra calculate a base estimate of $8.1bn for a 250,000 dead-or-missing toll, but they estimate this figure is likely to be at the low end. The team concludes that an estimate of $13.9bn is within the statistical margin of error. As of February 11, the Haitian government had reported 230,000 dead.