The Jamaica Labour Party’s Bruce Golding appeared set for a surprise victory in a general election that was apparently swayed by the government’s response to the most recent hurricane. Bonds were supported by a technical bid following a weekend maturity which is apparently being allocated back to the high yield credit. Locals have apparently accumulated dollars and there is pent up demand following an election induced investment hiatus. “The technicals in Jamaican bonds are in very good shape given that the 2007 maturity has just been paid,” Carl Ross, head of emerging markets research at Bear Stearns, tells LatinFinance. Audley Shaw is expected to take over at the finance ministry, a challenging job given the sovereign’s 130% of debt to GDP ratio. “Audley Shaw is very much in touch with the issues,” says Ross. “We believe the JLP has no intention of repudiating the debt,” he adds. Once the JLP forms a government, it has several pressing challenges. Stimulating growth is urgent. Bear has an underperform on the debt but is reviewing that.
Category: Bonds
IDB Going Native
The IDB’s private sector arm, headed by Hans Schulz, is looking to build up a domestic presence in Latin America, and hopes to have a third of its staff based locally by the end of next year, Schulz tells LatinFinance. “We want to be present in 10 countries in the region,” says Schulz. He adds that he would like to see up to 25 of his staff present in the region at any given time. Working with corporate borrowers, a new mandate for the IDB, will demand a larger presence in the region, says Schulz.
IDB Pushes Private Sector
Repositioning the IDB to better address private sector needs is underway. IDB president Luis Alberto Moreno must produce results quickly to validate his vision.
Argentina Joins CAF
CAF has signed up Argentina as a member with a $643m participation. It is first Latin, non-Andean nation to join the multilateral, following a recent change in the rules that allows such members. At the signing, CAF also agreed a $300m loan to partially fund the Interconexión Eléctrica Rincón Santa María-Rodríguez project. The deal is the seventh CAF has signed in the country. Full membership is expected to boost CAF financing to Argentina.
IDB Taps BofA’s Weissman for Corporate Finance
Warren Weissman, head of LatAm loan syndications at Banc of America Securities, is moving to the IDB to head the Corporate Finance division in the multilateral’s reformed private sector group, headed by Hans Schulz. As division head, Weissman will be responsible for a team of up to nine executives, a number that may grow with local additions in the coming months. He will focus on lending to corporates in the region. The idea is not to compete with commercial banks, but to participate jointly and complement their business in LatAm, Weissman tells LatinFinance. The IDB, currently undergoing a personnel overhaul, is looking to hone in on the private sector and shift away from its historical emphasis on large infrastructure and sovereign deals. Weissman is expected to start the Washington appointment in September.
Telefónica Colombia Readies $600m A/B Loan
Telefónica’s Colombian unit is preparing to launch a $600m A/B loan. The IDB will fund $125m in a 7-year A-loan and the remaining $475m will be syndicated out as a 5-year B loan, with ABN AMRO, Santander, Citi and BNP leading. Proceeds are for general capex and working capital, according to people close to the deal. Launch is expected in October.
Brazil’s Klabin Segall Files BRL300m Debenture
Real estate developer Klabin Segall has filed a BRL300m debentures program with the CVM, of which BRL150m should be issued in the coming months. Pricing and tenor have not yet been disclosed to the market. Itaú BBA is bookrunner, with HSBC and Santander as joint lead managers.
Argentine IFI Loan Proposal Positive, Say Analysts
Argentina’s plan to borrow $10bn from the IDB and World Bank in the coming months for 2008-2011 is being viewed as a positive move by Wall Street analysts, who believe the country would be subjected to a more disciplined approach to the markets and its debt management policy. “Argentina appears to be taking stock of the change in global conditions and financing risks; and the country is looking for new sources of funding that would require maintaining a more conservative policy framework,” says Merrill Lynch. Citi notes total amortizations with the IFIs are expected to be $6.4bn in that period, which permits the institutions to become net suppliers of funds to Argentina if they are needed. The move marks a significant change of tune by the Kirchner administration vis-à-vis multilaterals. Last year, Argentina paid down its IMF loans in a dismissive tone, saying the institution’s opinions were no longer welcome or relevant. The new funds would be used for investments in public works, social programs, health, science and technology.
Infosys Opens LatAm HQ in Mexico
Indian software firm Infosys has opened a LatAm headquarters in Monterrey, Mexico. The subsidiary will provide business consulting and information technology services for industries including banking, financial services, retail, consumer packaged goods, resource, energy and utilities. It will also serve as the firm’s development center for the region. Infosys chose Mexico over other countries in LatAm and the Caribbean because of the broad language skills available, geographical proximity to Canada, the US and Europe, and because many Infosys clients have operations there already. Infosys has appointed Mohit Joshi to head the new subsidiary. Joshi, formerly a group engagement manager with the company’s banking and capital markets organization, has more than 12 years of client and leadership experience. The Mexico operation will employee around 250 people, from Mexico and other countries, in its firm year of operation, ramping up to nearly 1,000 employees in its third year.
CVM Reportedly Probing Cosan
Brazil’s SEC, the CVM, is considering taking action against Brazilian sugar refiner Cosan, which is reorganizing to incorporate in Bermuda, according to a report in Brazilian daily Estado de São Paulo. Cosan raised $1.05bn with its US IPO and Brazilian market follow-own last Thursday via Credit Suisse, Goldman and Morgan Stanley. According to Estado, the CVM is trying to determine if the company’s proposed shareholder reorganization violates the rules of the Novo Mercado and the recently updated laws governing corporations. Potential penalties reportedly include a $30m fine and dismissal of board members. Under Cosan’s reorganization, controlling shareholder Rubens Ometto will receive 10 votes for each share, ensuring control of Cosan with just 10% of Cosan’s stock. In addition, any deals done in the US would not require Brazilian shareholder approval. The CVM has set a deadline of this Thursday for minority shareholders in Cosan SA, the Brazilian company, to decide whether to participate in the public exchange offering for shares in Cosan Ltd., based in Bermuda.