Meanwhile, with year-end fast approaching and a string of bad days in the market, bankers and issuers expect little to no more cross-border DCM activity until 2008. The list of pulled deals since the Fed’s 50bp October rate cut is long and well-known, including names such as Sanluis, Cap Cana, Unialco, Banco Macro and Banco Mercantil. “The market is categorically closed for emerging markets and high-yield issuers,” says a LatAm DCM banker among those with an unfinished 2007 pipeline, noting that there is still a window in the local markets. Although homegrown Latin problems are relatively few, a January market reopening will depend on external factors. If news from the next Fed meeting and the big banks’ Q4 reports is encouraging, business as usual may resume in the New Year.
Category: Bonds
IDB Signs Brazil Port Financing
The IDB has approved $144m in financing for Itapoa Terminais Portuarios for a private greenfield container terminal in Brazil’s Santa Catarina state. The package comprises an IDB loan of up to $57.6m from the bank’s ordinary capital and approximately $86.4m of co-financing from commercial banks. The project, dubbed TECON Santa Catarina, consists of the design, construction and operation of the port, including a quay and access bridge, container yard and administration buildings, general installations such as utilities, and other necessary equipment. It will add an additional 300,000 containers per year in port capacity, says the IDB.
IDB Lends $50m to Peru’s Sedapal
The IDB has approved a $50m loan to support the first phase of the Sedapal Lima water utility’s “Water for All” program. The program extends water and sanitation coverage in the outlying areas of the city. Sedapal expects to invest $1.4bn through 2011, to be raised through company generated cash flow, external loans, and state funding.
PDVSA to Buy Back Bonds
PDVSA plans to launch a tender for 79% of three series of bonds tied to the Cerro Negro crude oil project. The tender for 7.33% of 2009, 7.90% of 2020 and 8.03% of 2028 issues will go ahead before the end of the year. PDVSA did not say how much of each set of bonds it would buy back. The purchase price will be equal to par plus accrued and unpaid interest and an amount equivalent to 33% of the redemption premium in the indenture, says PDVSA. Bondholders entering into the lock-up agreement will sell back all of their bonds, as well as any they may subsequently acquire, it adds.
Banks Join IDB Trade Finance Program
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.
CentAm Remittances Seen Rising 10% in 2007
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).
Remittance Flow Fails to be Captured
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.
Junk Bond Tap Turns On
Bond supply resumed later in the year than usual because of a rise the global risk aversion driven by the sub-prime scare. But the taps turned back on in October, […]
Ecuador Gets $180m CAF Credit
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.
Aluprint Closing $135m Syndication
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.