Category: Bonds

The IDB issued COP65 billion ($30 million) in 10-year bullet bonds Tuesday. The inflation-linked notes priced 20 basis points through TES. Fees for Santander, the sole-lead, were 40 basis points. The transaction will settle on March 29.

Remittances to the LatAm and Caribbean region are set to exceed $100 billion by 2010, from $62.3 billion in 2006 and $53.6 billion in 2005, according to Donald Terry, manager of the IDB’s Multilateral Investment Fund (MIF). The 2006 number was bigger than all FDI and foreign aid combined and makes LatAm the biggest region in the world for remittances, according to the MIF. The increase is driven largely by a lack of jobs in the region and demographics. Last year’s total includes $7.4 billion to Brazil, $4.2 billion to Colombia and $23.0 billion to Mexico. Around 75% comes from the US, while an increasing amount is flowing from Europe. Better technology and competition is cutting processing fees, which have dropped to around 4%-5%, says Terry. Local banks active in the region have yet to find a way to capture most of this money. Remittances are typically distributed at some point through a bank, coop, credit union or microfinance institution. Few actually become deposits. A big stumbling block, say bankers, is that many of the remitters are working illegally and do not want to open accounts. Until this workforce comes to the formal economy, the opportunity will be lost.

The Inter-American Development Bank (IDB) has named Carlos Hurtado, former deputy finance minister of Mexico, as the new vice-president of finance and administration at the Bank. Last month, Hurtado was rejected as a new Central Bank board member after being nominated by President Felipe Calderón. According to the IDB, Hurtado will have responsibility for several departments, including budget, administration and corporate acquisitions, finance, human resources, technology and information and legal advice.

The Central American Bank for Economic Integration (Cabei) raised 750 million Mexican pesos ($68 million) Wednesday through a five-year deal that followed the most severe sell-off in LatAm assets this year. The deal was rated AAA locally and priced 5 basis points through TIIE. The deal follows a first tranche of 750 million pesos which issued January 17 and priced flat to TIIE. This week’s deal was five times oversubscribed, Cabei treasurer José Felix Magana told LatinFinance. He suggested that demand may have been motivated by funds switching out of equities. The Bolsa in Mexico closed the previous session down another 5.8%. Mexican banks, pension and investment funds and money desks participated in the Cabei offer which was managed by Accival, a unit of Banamex.

The Inter-American Development Bank (IDB) has agreed to lend Argentina $1.2 billion to finance infrastructure in the northern provinces of the country. The loan will help make up the third part of the financing of the Great Northern Project which covers nine of the country’s provinces. The loan will be split into two parts, with the first part consisting of $580 million for electricity infrastructure and $250 million for water and waste. The 25-year loan includes a six-year grace period and a variable rate, said the Bank.

HSBC is seeking to increase its stake in Banco Salvadoreño (Bancosal) and Inversiones Financieras Bancosal (IFB), and has offered minority shareholders $3 per share for the outstanding stock in IFB and $40 for each Bancosal share. HSBC acquired a 56.2% stake in IFB, the holding company of Bancosal, when it bought Panama’s Grupo Banistmo last November for $1.7 billion. The two public tender offers will cost around $191 million, estimate the Bank. It expects to complete the transactions by the end of March.

Andean Development Corporation (CAF), the Caracas-based regional multilateral financial institution, has followed up its local-currency issue in Venezuela last year with a second offering of the five-year paper. The Corporation sold $50 million worth (107.5 billion bolivares) of bolivar-denominated bonds via Citibank on Thursday. Last June CAF issued $100 million worth of local-currency bonds in Venezuela, the first time such paper had been issued by a multilateral in the country since the 1970s.

The Inter-American Development Bank (IDB) has signed a three-year guarantee facility with Mexican sofol Hipotecaria Su Casita to help it expand its access to local capital markets on more favorable terms, reduce its reliance on public funding sources and increase its mortgage origination. The agreement makes available up to $75 million in partial credit guarantees to support the issuance of up to $500 million in residential mortgage-backed securities (RMBS) by Su Casita. The specialized mortgage company expects to double the size of its mortgage portfolio to around $4 billion equivalent by 2010. This is the first time the IDB has used a guarantee facility to support a medium-term RBMS program, allowing the issuer to allocate IDB guarantee authority where it considers it most beneficial. “We expect to replicate this programmatic approach in Mexico, as well as other markets in the region,” commented Hans Schulz, head of financial markets at the IDB’s private sector department.