IDB has approved a $50m 6-year loan for Ecuador’s Banco Pichincha to increase financing for small business, micro enterprises and housing. An official of the multilateral declined to provide price terms on the facility, citing internal policies. A syndicated loan of $25m from foreign banks may complement the IDB transaction, the multilateral says. Additionally, the IDB’s Multilateral Investment Fund may provide up to $500,000 for a project to improve Pichincha’s methodologies and technologies to serve small businesses.
Category: Bonds
Posted inDaily Brief
Mexican ABS Seen Repricing
An increase in cost of funds and repricing of mortgages should see an upwards revision in Mexico’s ABS market, ING Mexico DCM head Jose Miguel Diaz Goni told a panel at the LatinFinance/Euromoney 7th Annual Securitization in Latin America Summit. “I see 12 months from now a repricing back to stable levels,” he says, noting that there could be 40bp of widening across the government yield curve.
Posted inDaily Brief
Mexico Telecom Reopens DCM
Grupo Televisa has forced open the cross-border DCM market for LatAm borrowers, offering the first large 144A transaction since January. The Mexican communications group priced $500m in 144a/RegS 2018 bonds with a 6.00% coupon at 99.28, to yield 6.09%, or 220bp over UST. This was at the tight end of guidance at UST+225bp area. The Baa1/BBB+ deal was four times oversubscribed, says a banker managing the transaction. It was allocated to more than 100 accounts on all continents. Televisa is using funds for refinancing debt and other corporate purposes. The transaction follows a $412m equivalent 30-year Europeso priced last spring, and gives Televisa a 10-year point which had been missing from its curve, says. HSBC and JPMorgan managed the sale.
Posted inDaily Brief
Brazil Fixed Income Flows to Lower Cost of Funds: Citi
S&P promotion of Brazil to investment grade will increase fixed-income flows and lower the sovereign’s cost of funds by 40bp, Citi says. “From a cost of capital view, it looks like the sort of potential of other sovereigns with recent action,” strategist Geoffrey Dennis says, noting that the market has priced in most but not all of the upgrade. Citi says Brazil yields, having traded at around 6.30% before the announcement, have already fallen to 6.09% on a blended USD sovereign bond yield basis. This is still above investment-grade Peru’s 5.70%, leading to the projection that Brazilian cost of capital could drop another 40bp.
Posted inDaily Brief
Ethanol Startup Fuels Loan Package
Brazilian ethanol startup CNAA is putting together a $670m financing including an IDB A/B loan and a pre-export facility, an official close to the company tells LatinFinance. The privately held greenfield company hopes to achieve a tenor of 15 years on a $250m A loan with pricing potentially in the Libor plus 300bp-350bp region, according to the executive. A $300m syndicated B-loan could reach 13 years and carry a margin of Libor plus 300bp, he adds. BNP Paribas has been tapped to lead the syndication, expected to get underway shortly. CNAA has also recently closed a $120m pre-export loan via Bradesco, ABN AMRO and Banco Espirito Santo. The 7-year club pays Libor plus 275bp. According to the executive close to the company, the A/B transaction is the first project loan for Brazil’s ethanol and sugar sector. He sees structured finance playing a bigger role in his industry as companies build out mill complexes. Odebrecht ethanol startup ETH also plans to use project finance for its initiatives, that company’s officials told LatinFinance late last year. CNAA has roughly $330m in equity, much of which is held by private equity funds belonging to Goldman Sachs, Carlyle Riverstone, Merrill Lynch, Discovery Capital, and Global Foods. SantelisaVale owns a 28% stake in CNAA.
Posted inDaily Brief
Debt Ratio, Policy Work Needed for Brazil Rate Hike: S&P
Brazil will need to see a sharper decline in its debt-to-GDP ratio and improve its fiscal policy in order to move up the ratings ladder after reaching investment grade last week, S&P analysts said in a conference call Friday. “The key to keep moving up the ratings table will be an effort to bring fiscal policy in line with higher-rated countries,” says Lisa Schineller, S&P MD. She sees the ending of the CPMF tax in December as an example of a setback. The decision to raise the Selic 50bp to 11.75%, the first increase in three years, was also key to the timing of the rating action. The move “reinforces the operational independence of the central bank, which is a key underpinning of this rating and an example of a proactive policy move,” she said. S&P also expects the real to depreciate this year due to a widening current account deficit, and a narrowing trade surplus.
Posted inDaily Brief
IDB Approves Brazil Environmental Loans
The IDB has approved an $83.2m 25-year variable interest rate loan for improvements in the quality of water and in infrastructure to avoid floods in Porto Alegre, Brazil. The facility will help to improve environmental management in the municipality of Porto Alegre and promote efficient municipal water, sanitation and storm drainage services, the multilateral says. The loan has a 5-year grace period. The multilateral also approved a $56.7m 25-year loan to the municipality of Goiania for an urban environmental program in the Macambira and Anicuns River watersheds.
Posted inMagazine
The Chinese Curse
Michael Pettis cut his teeth in LatAm DCM two decades ago. The Beijing-based academic warns of further EM crisis.
by James Crombie
Posted inMagazine
Shifting the Paradigm
LatAm has undergone constant evolution in the last 20 years, says CAF president Enrique García. But income inequality remains a glaring problem.
by Julio Urdaneta
Posted inMagazine
Local Currency Extensions
After a long struggle to define itself as a relevant institution, the IDB is proving its worth as a local currency innovator. It seeks to lend more and leverage guarantees.
by James Crombie