Category: Bonds

The IDB has appointed several financial institutions confirming banks in its trade finance facilitation program (TFFP). They are BBVA subsidiaries in Argentina, Chile, Colombia, Mexico, Panama, Peru, Paraguay, Uruguay and Venezuela. In addition, Banco de Costa Rica and Panama’s Banco Aliado were appointed issuing and confirming banks in the same program. The BBVA LatAm subsidiaries add to its branches in Belgium, China, France, Italy, Japan, UK and USA as confirming banks. “The participation of its Latin American subsidiaries makes BBVA one of the leading TFFP confirming banks in the region and will further boost the TFFPs’ objective of fostering intra-regional trade finance flows,” says the IDB. It adds that the inclusion in the program has enabled BBVA Uruguay to directly confirm a standby LC issued by an Ecuadorian TFFP issuing bank and used for the import of machinery from Uruguay to Ecuador, hence promoting trade business between the two countries. Under the TFFP, the IDB extends guarantees to cover documentary and standby LCs, promissory notes, bills of exchange, bid and performance bonds, advance payment bonds and other instruments used in international trade finance transactions.

Remittances to Central America will grow by approximately 10% to about $12.1bn in 2007, according to the IDB’s Multilateral Investment Fund (MIF). Remittances will represent at least 10% of four countries’ gross domestic product: Honduras (27%), El Salvador (17%), Nicaragua (17%) and Guatemala (12%). They will total the equivalent of about half of Nicaragua’s exports, approximately 60% of Guatemala’s, about 75% of Honduras and almost all of El Salvador’s exports, says MIF. El Salvador leads CentAm in remittances per capita, reaching approximately 1m adults (averaging $300, 12 times a year). In Honduras, the fastest growing remittance market in the CentAm region, about 950,000 adults regularly receive remittances (averaging $225, 12 times a year). In Guatemala some 1.4m adults receive remittances (averaging $240, 12 times a year) while in Nicaragua 500,000 adults receive them (averaging $205, 10 times a year). Remittances to Costa Rica and Panama are less prevalent, but still reach important numbers of people: 300,000 adults in Costa Rica (averaging $250, eight times a year), and about 100,000 adults in Panama (averaging $320, 10 times a year).

Most Central Americans who send or receive international money transfers remain excluded from the formal financial system, according to the IDB’s Multilateral Investment Fund (MIF). “We have to give these families more options to manage their own money by banking the unbanked. This is critical for economic development,” says MIF manager Donald Terry. About $3bn of the money sent by CentAm expatriates is not used for immediate consumption but the potential economic impact is limited by the fact that more than 90% of the flow remains outside the formal financial system. According to MIF, about 56% of the CentAm households that receive remittances pick up their transfers at a financial institution. Typically they are not offered bank accounts. However, survey respondents showed significant interest in financial products and services such as savings accounts (53% said they were “very interested”), life or health insurance (44%), small business loans (38%), mortgage loans or home construction loans (31%) or education loans (25%). The survey focused on adults who receive remittances in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

CAF has approved a $180m loan to help improve Ecuador’s debt profile. Ecuador’s Economy Ministry will manage the contingent credit, which will help smooth out the amortization schedule and extend maturities on the internal public debt.

Mexican packaging company Aluprint is close to finalizing syndication of a $135m dual-currency loan. Leads GE Capital and Rabobank have obtained participation from BBVA, Bladex, Banorte and Citi. A $20m portion is still waiting to be claimed. The deal will pay on a leverage grid, which at the lowest level of 2.00x pays 225bp over TIIE or Libor, and at the highest level of 4.25x leverage, pays 375bp, according to a banker away from the deal. The company is looking for a $120m senior secured term loan and a $15m credit line. Participants can choose between peso and dollar commitments.

Moody’s is looking into an upgrade for Banco Latinoamericano de Exportaciones’ (Bladex) Baa3 deposit, debt, and issuer ratings and its D+ bank financial strength rating. The agency lauds the bank’s “track record of increasing core profitability, earnings diversification, and improving asset quality, as well as management’s new strategy to broaden its activities in trade finance and securities business in the Latin American and Caribbean regions.” It adds that the addition of factoring, leasing, and structured trade finance should leverage management’s strong relationship, product and risk assessment capabilities and lead to increasing profitability over time. Liquidity and the funding structure has also been strengthened by growth and diversification in Bladex’s deposit base, and by increasing access to longer term funding from banks and official institutions. Challenges include high competition in core business areas and relatively thin margins, reflecting the bank’s emphasis on high quality names in the region and the predominantly short term trade-related nature of its business. Bladex reported total assets of $4.5bn and equity of $614m as of September 30.

Moody’s is looking into an upgrade for Banco Latinoamericano de Exportaciones’ (Bladex) Baa3 deposit, debt, and issuer ratings and its D+ bank financial strength rating. The agency lauds the bank’s “track record of increasing core profitability, earnings diversification, and improving asset quality, as well as management’s new strategy to broaden its activities in trade finance and securities business in the Latin American and Caribbean regions.” It adds that the addition of factoring, leasing, and structured trade finance should leverage management’s strong relationship, product and risk assessment capabilities and lead to increasing profitability over time. Liquidity and the funding structure has also been strengthened by growth and diversification in Bladex’s deposit base, and by increasing access to longer term funding from banks and official institutions. Challenges include high competition in core business areas and relatively thin margins, reflecting the bank’s emphasis on high quality names in the region and the predominantly short term trade-related nature of its business. Bladex reported total assets of $4.5bn and equity of $614m as of September 30.

Colombian mobile operator Movistar has requested loans worth $600m from the IDB. The unit of Spanish telecoms group Telefónica, expects to use the funds for capital investment, debt refinancing and working capital needs. Movistar Colombia spent $600m over the last two years to increase and improve its network coverage and update technologies.