The Brazilian government, through its development bank BNDES, and in conjunction with the IFC and IDB, is looking to set up a $40m fund to help plan public-private partnerships for infrastructure projects, Mauricio Ribeiro, director of Brazil’s PPP program, tells LatinFinance. “Today, the bottleneck [for PPP infrastructure projects] is not the lack of funding or the legal framework for projects. It’s the capacity to analyze, and plan these projects,” says Ribeiro, adding that on top of a slow, bureaucratic system that takes up to eight months to approve a project, Brazil’s public sector is lacking in qualified professionals to plan and direct the funds for projects, thanks to a mass departure to the private sector during the privatizations of the 1990s and early 2000s. “The main issue we have to face is that we don’t have the capacity to launch the number of projects we need to put forth in the next few years.” Ribeiro, who spoke on a panel on construction finance in Latin America at Silas, says the solution lies in an offshore fund, staffed with a team that will source top of the line consultants and planners from around the globe and prepare proposals and logistical solutions that can be presented to Brazilian lawmakers and governments for approval. In question, however, is whether the BNDES, which has recently undergone a change of leadership, will continue to support this project, which was begun under the former president Demian Fiocca. Ribeiro says the fund will be managed by the IFC and adopt the World Bank’s bidding and proposal guidelines.
Category: Bonds
IDB Management Shakeup on the Way
Hans Schultz, head of the financial markets group at the IDB, is taking over an upgraded private sector department at the bank starting July 1. He replaces Hiroshi Toyoda, who is moving elsewhere within the IDB, and will lead a renamed structured and corporate finance department. The new unit combines what were the financial markets and infrastructure groups into a three-pronged department combining financial markets, infrastructure and a new corporate finance area. Heads of each are being hunted. The change is part of a wider shakeup being spearheaded by president Carlos Alberto that could result in up to 30 replacements in the upper ranks of the multilateral institution. The new area will be making loan commitments of $1.5bn-$2.0bn a year, versus approximately $920m in 2006, Schultz tells LatinFinance.
IDB Raises $207m From Mexican Peso Issue
The Inter-American Development Bank (IDB) raised $207m on Monday via the sale of 2.25bn Mexican peso-denominated bonds, reported Dow Jones, quoting the deal manager, TD Securities. The AAA-rated bonds sold at 97.435 to yield 7.78% per annum. The bonds, which carry a coupon of 7.5% per year, mature on December 5, 2024.
High Return, Low Risk
Microfinance institutions have an array of funding sources available, all of which should appeal to investors, says Vikram Gandhi, global head of Credit Suisse’s financial institutions banking group.
ABN Personnel Move Sparks $1.6bn EM Outflow
News that veteran EM portfolio manager Raphael Kassin has quit ABN AMRO’s Global Emerging Market Bond Fund coincides with a $1.6bn redemption from that $6bn fund in the past week. Were it not for the outflow associated with Kassin’s departure, EM would have seen inflows of $160m last week, according Emerging Portfolio Fund Research.com (EPFR). Kassin is moving to Credit Suisse in mid-July, where he is expected to take up a similar role. There is heated speculation about why he is moving at a time when his fund is presumed to be doing very well. However, a source close to Kassin says the move was just a run of the mill talent poach driven by an attractive offer from Credit Suisse. ABN’s AAF Emerging Market Bond Fund has had a stellar performance in 2006, ranking top of the EM funds tracked by EPFR, with a 30% return, beating the group average by 20 points. But in the Jan-Feb period the fund was down 0.9% and ranked 51 out of the 53 funds tracked by the service. In early March, the fund was 31% invested in Argentina, 25% invested in Venezuela, and had zero exposure to Brazil, Russia or Mexico. Another 26% was in cash, according to EPFR.
IMSA In Talks With Ternium
IMSA, Mexico’s largest steel-maker, has announced it is in talks with Luxembourg-based Ternium, the largest steel-producer in the region, over a possible sale or strategic alliance. Ternium, which is owned by Argentina’s Techint, has been eying the Mexican business since last year, according to market reports. In a filing with the Mexican Stock Exchange, IMSA said it had also attracted interest from other companies in the sector as part of the trend of consolidation seen currently in the steel industry worldwide. Last October, the Canales Clariond family took control of IMSA after upping its stake to 86% when it paid just over $1 billion for a further 43% stake.
Arcelor Mittal, CVM Agree Terms
After protracted negotiations stretching over the best part of a year, leading steel group Arcelor Mittal has agreed terms with Brazilian securities regulator CVM for its buyout of local shareholders. The regulator announced earlier this year that the Luxembourg-based company had to raise its offer to minority shareholders in brazil in order to close its merger. Last year, Netherlands-based Mittal Steel bought steel company Arcelor Brasil as part of its takeover of rival Luxembourg-based steelmaker Arcelor in a deal worth $37.3 billion. Following the merger, the CVM ruled that Mittal had to offer to buy out minority shareholders of the Brazilian unit. The European company offered 33.3 reais per share, well below the 51 reais per share demanded by shareholders. CVM had initially demanded a price of 47.9 reais per share in February but later accepted an offer from Arcelor Mittal of 11.70 reais per share in cash and 0.3568 of its own A shares, in total worth 51.27 reais a share, according to the company.
IDB Approves $400 million Credit For Mexican Toll Roads
The IDB has approved a partial credit package of up to $400 million to help finance the privatization and concession of a four-highway network in Mexico. The credit is intended to help the eventual developers of the infrastructure projects obtain long-term financing via bonds and loans in Mexican pesos at better terms than it would be able to achieve without the guarantee.
CAF Grants $600 Million For Tocoma Project
Caracas-based Andean Development Corporation (CAF) has approved a $600 million loan to part-finance Venezuela’s hydroelectric plant Manuel Piar (Tocoma), situated in the south of the country. Due to be completed by 2014, the facility will have a capacity of 2,160MW. This is the second loan granted by CAF to the project – the first was for $300 million in 2004. The total cost of the project is set at just over $3 billion and is being financed by the state and other “multilateral sources”, according to CAF.
Costa Rica Goes For CAFTA Referendum
President Oscar Arias of Costa Rica has announced that the country will hold a referendum with regard to ratifying CAFTA – the free trade agreement with the U.S. Arias publicly supported CAFTA, which is as yet unratified in Costa Rica, during his presidential campaign, claiming it was the only way to attract foreign investment to the country. However, the trade pact has come under strong criticism in the Central American country by those who fear competition will destroy local production.