Category: Bonds

The IDB’s Multilateral Investment Fund has approved a $175m loan to Cooperativa de Servicios Financieros a la Microempresa (CSFM) and agreed to cooperate in the design of a financial services coverage system for suburban and rural entrepreneurs in Chile. The 3-year loan, renewable once for 3 more years, pays 300bp over 6-month Libor.

Peru plans to prepay about $1.1bn of its debt to the World Bank and IDB by mid-year, according to local news and wire reports citing finance ministry official Jose Miguel Ugarte. It will use treasury funds to finance the repurchase of $620m in debt from the World Bank and $497m from the IDB, and is also considering the sale of new PES-denominated debt. Peru repurchased $838m in outstanding Brady bonds March 7. The planned buyback will be Peru’s biggest since a $1.8bn repurchase of Paris Club debt in July.

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.

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.

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.