Bonds from Argentine brewer Cerveceria y Malteria Quilmes have come off sharply over the last week, more because of Argentine risk in general than anything credit specific, according to analysts. Credit Suisse had the $120m 7.375% of March 2012 bid at 80 late last week, down 20% versus 100 the week before, and most other Argentine corporate bonds are quoted below 50. “Different refinancing options they had are really drying up due to the government’s nationalization of the pension system,” says Joe Bormann, corporate analyst at Fitch, speaking of Argentine corporates in general. Fitch, which rates Quilmes BB, put the beer maker and several other Argentina-based corporates on negative watch in late November, following news of the nationalization. Only a couple of Argentine names – in the energy and telecoms sectors – are trading above 80, Credit Suisse data shows. Analysts generally see the sovereign headed for disaster, with a negative impact inevitable for corporates.
Category: Bonds
IDB Loans $80m to Uruguay
The IDB has approved a loan of up to $80m to Uruguay so it may improve its sewer service. An initial loan of $43m will be used by the country’s National Water Supply and Sanitation Administration and the IDB could approve additional financing for a total of $80m. The loan is for 25 years with a 4-year grace period and an adjustable interest rate. It will be disbursed over a four-year period. Local counterpart funds for the program total $39.5 million.
IDB Funnels Funds into Argentine Wineries
The IDB has approved a $50m loan to Argentina’s government so it can help small-scale grape growers boost income and carry out investment plans. The program will be carried out by the Argentine Agriculture Department and Coviar, a public-private corporation that promotes Argentina’s wine and grape industry. The loan, which was approved on December 10 by the IDB’s board, has a 25 year tenor, with a five-year grace period and an adjustable interest rate. Local counterpart funds for the program total $25m.
Prolec Buys Stake in Indo Tech
Mexico’s Prolec-GE, a joint venture between General Electric and Xignux, has agreed to buy a 54.35% stake in Chennai-based Indo Tech Transformers. It has also initiated a public offer to acquire an additional 20.00% stake in the Indian company. Citi, the offer manager, says in a letter to the Indian stock exchange that the value of the 54.35% stake amounts to R2.3bn or almost $48m. The additional 20% stake is valued at about $17.6m.
IDB Supports Bahia
The IDB has approved a $409m loan to Brazil’s Bahia state to implement a fiscal modernization program that will include measures to boost tax collection, improve spending controls, and enhance its public debt profile. A first disbursement of $209m will be used to improve the public debt profile and cut payment service by eliminating the residual debt obligations stemming from a 1997 debt agreement with the federal government, says the IDB. A second disbursement of $200m will support improved fiscal management measures, helping the state meet the goals set in its fiscal adjustment program and in the fiscal responsibility law. The loan will help improve cash management, enhance mechanisms to boost tax collection on the state’s vehicle property tax, as well as finalize the implementation of a debt management system and an electronic tax invoice system for large taxpayers.
IDB Extends Credit Line to Colombia
The IDB has announced that it has approved a $650m credit line to Colombia to help Bancoldex finance investment projects and develop exports. It will initially receive a $100m loan. It will also receive an additional $650m from the local government. The loan is for a 25-year term with a 4-year grace period at an adjustable rate based on Libor.
IDB Provides Caribbean PCG; Sao Paulo Funds
The IDB has established a $200m partial credit guarantee facility to support FirstCaribbean’s long-term loans to infrastructure projects, tourism ventures and mid-size businesses. The facility, denominated in USD or local currency, will be available for 3 years to support at least $400m in FirstCaribbean lending to private sector borrowers. The IDB says initially the facility will focus on transactions in Jamaica, and later expanded to the Bahamas, Barbados, Belize and Trinidad and Tobago. Separately, the IDB has approved a $194m 25-year loan to the state of Sao Paulo to improve its roads network. The program will be carried out by the Sao Paulo state highways department and the loan has a 5-year grace period and is priced basis Libor.
CAF Shells Out $660m in Credits
CAF has approved $660m in loans and credits to three separate borrowers. It agreed to lend $300m to Colombia’s Bancoldex, to help it support SMEs. The Andean development bank also plans to extend a $210m credit line to Panama’s Banconal. Finally, it will lend $150m to Uruguay’s UTE electricity generation and transmission administrator, to support a 3-year program to strengthen the country’s electrical system.
Colombia, El Salvador, Suriname Get IDB Cash
The IDB has approved a $250m loan Colombia to improve water and sanitation services. The bank says this will be the first in up to 3 loans to be disbursed. Colombia intends to increase urban water service coverage from 94.5% to 97.8% in 2011, and in sanitation from 90.1% to 93.2%. Terms were not disclosed. The IDB will also lend $500m to El Salvador to improve the safety net for the poorest municipalities and households. The 2-tranche loan for $200m in 2008 and $300m in 2009 will have a 20-year term with a 5-year grace period at a variable interest rate. And Suriname has obtained a loan of up to $62.5m to repave the 140-km long Meerzog-Albina road, the IDB says. The loan will finance 49% of the total cost of the project. Part of the money will come from the bank’s ordinary capital, with maturity periods of 25-30 years and grace periods of 5-6 years. Another portion will come from the bank’s Fund for Special Operations. The facility will be denominated in US dollars and have a disbursement period of 5 years, the IDB says.
IDB Offers Mexico Housing Boost
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.