The IDB has closed on the first part of a $65m A/B loan for El Salvador’s Banco Multisectoral de Inversiones (BMI). The multilateral’s first loan for a financial services firm in the country allows the mid-sized lender to make long-term mortgage and small-business loans. The facility is composed of a $50m 10-year A tranche from the IDB and a B tranche that will undergo a small syndication. The syndicated piece is expected to be 5-7 years and reach about $15m in size. BMI is owned by the Salvadorian central bank. IDB officials tell LatinFinance that a similar transaction that adds a subordinated piece to the A tranche is also being prepared for another CentAm financial services institution. The IDB is also readying a loan for Costa Rican state utility ICE featuring an $180m A tranche and $200m B tranche with Citi as lead arranger.
Category: Bonds
IDB Loan To Support Paraguay Long Term Finance
A $150m conditional credit line from the IDB signed last week will help develop much needed mortgage and long-term financing in Paraguay, its finance minister Cesar Barreto Otazu tells LatinFinance. “The country needs to finance productive investments,” Barreto Otazu says. “Paraguay’s financial system cannot provide those resources because of the short term of the deposits in it,” he says. The loan will help strengthen long term financing initiatives led by Paraguay’s Development Finance Agency, a second tier financial unit created by the Paraguayan government. The IDB loan also will aid the country’s effort to boost meat exports, education reform and an economic census. Paraguay is planning to return to the international debt markets in 2009, the minister says. But it is currently implementing measures to improve the country’s rating and overall fiscal scenario. Upcoming elections also could help boost financial stability. “Once the political panorama is clearer in Paraguay we will be able to access the markets in better conditions,” Barreto Otazu says.
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Miami Bound DCM Bankers Stay Optimistic
The LatAm cross-border DCM markets have been all but shut since early December, but heading into IDB annual meetings between issuers, investors and financiers, there are some glimmers of hope. The markets are taking bad news – such as UBS and Lehman writedowns, and Bernanke’s testimony this week – without spiraling further downwards. Pricing is nowhere near back to normal, as one DCM banker points out, but if enough participants believe we have seen the worst, a new issue could yet emerge to jump start the market. Petrobras – fresh from a roadshow – is just waiting to issue, and any of the better sovereigns or high-quality state entities like Pemex could be around the corner if a few days of calm open up. And LatAm non-financial corporate issuers face a big spike in maturities in the second half of the year, according to Moody’s, so they will be looking for windows. Some $21bn of corporate debt comes due in LatAm through 2009, the agency says. The big question for all borrowers is who goes first, and how much they have to stump up in a market reopening premium.
Dark Cloud Hangs Over IDB Meetings
LatAm is in its best ever fundamental shape to withstand bearish pressure overhanging from wobbly developed world markets. But as IDB annual meetings get underway in Miami, the hostile external environment – how bad it will get and what impact it will have on EM – is top of the agenda. LatAm reserves are at all time highs, debt is rapidly being paid down, there is greater commitment to responsible fiscal and monetary policy and increasing evidence that countries can maintain stability through a whole cycle, rather than just the upswing. And locals remain fairly bullish. But those who assume the global turmoil will not dent LatAm are whistling past the graveyard. “People are concerned, you can feel the anxiety,” says a veteran LatAm debt banker. “Overall it’s going to be a hard year for everyone, there’s no doubt,” he adds. According to Larry Summers, Charles W. Eliot professor at the Harvard University Kennedy School, the US recession is different to the standard inventory recession, making it more likely to be protracted. “It’s appropriate I think to be quite concerned,” Summers tells LatinFinance, referring to the US economy. “We haven’t seen a comparable situation in a long time and I think there’s the possibility that it could get worse,” he adds.
IDB Approves Loan to Uruguay
The IDB has approved a $5.4m loan to Uruguay for a foreign trade management program to foster international economic integration. The 25-year term loan has a 54-month grace period, at a variable interest rate and will receive $500,000 in local counterpart financing.
IDB Lends to Colombia for Public Services
The IDB has approved the first $50m tranche of a $200m credit line for second-tier financing for public service providers in Colombia. The main goals of the program are to facilitate longer maturities for eligible projects of public service providers, improve access to financing, in particular for small projects, and consolidate the role of government agency Findeter.
Paraguay Raises $50m with IDB
The IDB has approved a $50m loan to Paraguay to provide medium and long-term financing for business ventures that support the promotion of competitiveness of the productive sector. The 30-year variable-rate loan, the first from a $150m credit line for investment projects, includes a 5.5-year grace period.
Bahamas Tests Sovereign Waters
High grade Bahamas has broken a regional sovereign silence in the cross-border DCM markets, pricing a $100m 7.125% of 2038 bond at 99.865 to yield 7.136%, or 275bp wide to UST. The A3/A- issue was cut off after demand reached $110m, according to a banker on the transaction. About 40% of the orders came from Caribbean insurance companies, pension funds and other locals. The remainder of the investor base was split between North America and Europe. The sale was managed by RBC, in its first bookrun deal in the region in recent memory, alongside FirstCarribean.
Mexico Buys Fixed Income Dips
Mexico’s finance ministry has retired ahead of schedule $714m from 10 global bond series, with maturities ranging from 2009 to 2034. The move is part of its aim to reduce net foreign debt by $500m this year. The various transactions took place in “the last few weeks” and were financed with local market debt issuance and loans from international financial institutions, says Hacienda. “The volatility that has prevailed in the international markets during the last few weeks represented an opportunity to buy back specific off-the-run global bonds,” it says. The ministry notes that the 10 issues were considered among the more illiquid, and that it wished to decrease their importance on the yield curve relative to benchmark bonds.