Category: Bonds

The financial markets crisis could last 1-3 years, according to a survey of more than 100 bankers. The poll, commissioned by the IDB, IIC and Felaban, notes that 2 out of 3 banking sector executives believe the crisis will affect their domestic markets for 1-3 years. Mexican bank executives are somewhat more optimistic than their Central American and South American counterparts. Six out of 10 executives forecast a decrease in the availability of funding for their financial institutions. Other expected effects are a decline in remittances and in trade financing. The survey also finds that bankers anticipate SMEs will face higher rates and stricter lending requirements. However, 9 out of 10 bankers say their institutions remain interested in working with SMEs, providing them services such as working capital loans, credit lines, advice on export deals and payroll and payments management.

Ecuador’s economic policy coordinator Diego Borja says his country will borrow $500m from the IDB to help finance its 2009 budget. But IDB officials say only that the multilateral has not approved a facility and is still “evaluating several projects to help the country achieve its development goals.” While a loan is being considered, it has not been vetted by the development bank’s board yet. “We are negotiating energy and transportation infrastructure projects, among others,” says the official, who declines to be named. UBS Pactual says it suspects the facility does not represent net new money for Ecuador, but rather would be used to roll over maturities due this year. The shop also says the government’s estimate of a $1.5bn fiscal deficit is too optimistic, adding that even if Ecuador secures the funds, its balance sheet is likely to reflect tight fiscal accounts for 2009.

A February 9 Daily Brief entitled “CAF Bags Samurai Private Placement” incorrectly states the coupon on CAF’s JPY10bn 2019 bond issue. The correct rate is 4.3%.

CAF has placed JPY10bn ($108m) in 2019 bonds paying 3.4%, according to an official at the Andean development bank. The issue was placed with a single Japanese investor, whom the official declined to name. Nomura Securities managed the transaction, rated A+ by Fitch. CAF is no stranger to the Japanese markets, having placed 9 transactions since 1993, according to Dealogic, totaling about $1.17bn. The most recent was a JPY5bn issuance of 1.47% 2010 notes in November 2007, also through Nomura. CAF is apparently in no hurry to raise funds, but it is increasing its private placement activity in response to public market turmoil. “CAF’s ratings could benefit from an increase of its loan diversification and/or an enhancement of its capital base,” says Fitch. “Downward pressures could arise from a further increase on private sector exposures on the loan portfolio and/or a stress situation of a member country that could affect the benefits of its preferred creditor status,” it adds. CAF plans to borrow $600m-$800m from the international markets this year.

Cabei has again added to its growing Taiwan bond issue, placing TWD1.5bn ($45m) in 2013 bonds at par with a 2.7% coupon. This is the fourth tranche from the Central American development bank’s offering that began in December, which now totals TWD6.5bn. The previous three consisted of 2.6% two-year notes. HBSC is managing the sales for the TWD7bn program. A2/A minus-rated Cabei also recently issued $19m-equivalent in local Costa Rican bonds and plans to place additional issues in at least two more domestic LatAm markets, and possibly a European market.

CAF has agreed to provide a $400m contingency loan to Peru to help mitigate the effects of the global economic crisis. The line is part of the $1.5bn in available lines CAF pledged in October 2008. The facilities are to be used by CAF’s member countries. There is no set time limit on the use of the funds, a CAF spokeswoman says. She declined to give the interest rates associated with the use of the credit line.