Mexico-based telecom America Movil plans to increase its share buy-back fund by MXP40bn. The buyback proposal and a MXP0.20 dividend will be put to a shareholder vote on or before April 30.
Category: Bonds
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IDB Approves Education Loan to Argentina
The IDB has approved a $2.7bn 9-year conditional credit line for investment projects in Argentina and a first $630m disbursement to support education. The loan is for a 25-year term, with a 3-year grace period with an adjustable rate of 5.64%, Marcelo Cabrol, education division chief of the bank tells LatinFinance. Local counterpart funds for the loan total $70m and for the credit line $300m.
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LatAm Remittance Growth Slows
Migrants from LatAm and Caribbean sent some $66.5bn back to their home countries in 2007, about 7% more than in the previous year, according to estimates by the IDB’s Multilateral Investment fund (MIF). “This is the first time since we started tracking remittances in the year 2000 that we haven’t seen a double-digit increase,” says MIF manager Donald Terry. “This is mostly because the region’s two top recipients of workers remittances, Mexico and Brazil, departed significantly from past trends.” Mexican migrants appear to be less inclined to send money home, citing concerns about stricter enforcement of immigration laws and a slowing US economy. Increasing economic opportunity at home and a strengthening local currency have reduced the appeal of sending money home for many Brazilian immigrants in the US. Remittances to Mexico, however, were virtually unchanged in 2007, rising barely 1% to $24bn, while transfers to Brazil dropped 4% to about $7.1bn last year, MIF says.
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CentAm Remittance Flows Hold Up
Remittances to countries in CentAm increased 11% to $12.4bn last year, bucking the regional slowing trend, according to estimates by the IDB’s Multilateral Investment fund (MIF). Transfers to countries in the Andean region rose 5% to $11.6bn. Following a 6% drop in January remittances to Mexico year-on-year, MIF manager Donald Terry says that he could not predict whether this decline would continue or even spread to other countries, particularly in CentAm “We still don’t know for certain whether this is a short-term change or the beginning of a new direction,” he adds. “But if it were to become a trend, it will push millions into poverty.” Remittances have become a crucial source of income for many developing countries. In Guyana, these flows represent 43% of GNP; in Haiti 35%, in Honduras 25%, and Jamaica and El Salvador 18%, according to MIF. About three-quarters of the remittance flows to LatAm and the Caribbean come from the US. Spain and Japan are other major sources, the fund says.
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Microfinance Seen Expanding
Microfinance sector continues to grow in LatAm, according to Fernando Lucano, fund manager at Peru’s Cyrano Management, manager of the $265m Global Microfinance Facility fund. “In Peru there is more or less $2.5bn of financial market assets invested in microfinance,” says Lucano. “The size of the Peruvian financial system is between $18bn and $25bn, so there is 10% of assets in microfinance, and that will continue to grow,” he adds. The microfinance sector is growing by 30%-40% a year in Peru, Lucano states. “There is business for everybody: Investment banking, rating agencies, sophisticated investors,” he adds. But the growth and increasing of microfinance calls for a more sophisticated look at the sector, says Lucano, a panelist at a microfinance forum organized by Credit Suisse in New York.
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Deutsche Names Conroy to Head Trade Finance
Deutsche Bank has appointed David Conroy Americas head of trade finance and cash management corporates for its global transaction banking (GTB) business area. GTB encompasses Deutsche Bank’s cash management, trade finance, capital market sales, and trust and securities services. Based in New York, Conroy will report to Marilyn Spearing, global head of trade finance and cash management corporates. Conroy was previously with Citibank Global Transaction Services. Prior to that, he was in transaction banking at Standard Chartered and JPMorgan. “The Americas is an important pillar of our global approach and we are committed to making the necessary investment of financial and human capital to continue our success in this region,” says Spearing.
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EM Debt Underperforms
EM Bond funds dropped 0.61% in the week ended March 6, according to Lipper. That was far worse than the 1.10% rise of International Income funds, and the 0.25% pickup seen by Global Income funds. So far this year, EM Bond funds are up only 0.43%, compared to a 5.81% gain for International Income and a 2.73% increase for Global Income.
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Banco Hipotecario to Buy Back $61m in Bonds
Argentina’s Banco Hipotecario plans to repurchase $61m in 2013 notes, just under 55% of the $112m in dollar and euro debt it was looking to take out. The total includes $16m in 2013 dollar notes and $44m in euros. The bank launched a tender for $56m of each type January 29, offering $895 per $1,000 tendered and EUR855 per EUR1,000. Deutsche Bank managed the offer.
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More Colombia Rate Hikes Likely, Says BBVA
Another rate hike in Colombia looks likely as inflation expectations for 2008 and 2009 continue to be high, according to BBVA. “Non-food inflation is above the central bank’s goals,” says Juanita Tellez, a senior economist with the bank, who declined to specify how much of an adjustment is needed. February inflation indicators, to be released Saturday, could accelerate a rise if they are high. “If not, the central bank will wait and see how global economy continues to develop,” says the analyst. Recent appreciation of the peso is meanwhile attributed to weakness in the dollar, “something that a small economy like Colombia cannot control,” Tellez says. Colombia last week raised the reference rate to 9.75% from 9.50% in a surprise move that followed higher-than-expected January inflation data.
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Colombian Pension Funds Slow to Change
Changes announced last week by Colombian regulators to rules governing pension funds are likely to have only a gradual impact, owing to strength in domestic markets. The Superintendencia Financiera announced last week a long-awaited increase in equity investment limits – to 40% from 30% – and on investment in international securities, to 40% from 20%. “This is a very good sign,” Felipe Gaviria, VP in asset management at Santander Colombia, tells LatinFinance. “It’s always good to be able to expand your portfolio. However, the impact will be minimal at first.” Gaviria explains that attractive prices in local bonds and equities will prevent pension fund managers selling significant amounts to buy foreign securities. In the long term, though, there will likely be some increase in international assets. Investment of up to 5% in local and offshore private equity funds is also now permitted, subject to certain rules. Although pension funds may invest in infrastructure projects – which Gaviria says are a good long-term investment – via PE, he would like them to be able to make direct equity investments.