Maria Helena Santana, commissioner of the CVM, Brazil’s market regulator, was tapped by finance minister Guido Mantega to become the president of the commission, replacing Marcelo Trindade, who was expected to step down following a three-year term at the helm of the CVM. Before joining the regulator in 2006, Santana spent12 years at the Bovespa working alongside Raymundo Magliano Filho, the exchange’s president. Speaking on the sidelines of a conference a week ago, Santana told LatinFinance the CVM has recently upped its scrutiny of pre-IPO executive compensation packages and loans from underwriters. She will be the first woman to head Brazil’s market regulating agency.
Category: Bonds
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Investors More Interested in Microfinance: S&P
Microfinance is increasingly on investors’ radar screens and S&P is raising coverage of this sector, which is expected to yield deal flow in the Latin capital markets. “The lack of consistent metrics for analyzing MFIs [microfinance institutions] has hindered investment at a time when microfinance is growing at a significant rate,” says Cynthia Stone, managing director and chair of S&P’s EM council. “And despite the level of interest, mainstream investors need standard metrics before they can invest in this particular sector.” S&P says its new report on the sector provides needed recommendations for a rating methodology that can be used globally and consistently to rate MFIs within countries, across borders, and across asset classes. In May, S&P graded the first publicly rated microfinance CDO and it expects to rate an additional two to three transactions in the months ahead, with issuance levels potentially reaching $500m by the end of 2007. “As the existing microfinance institutions also become adept at handling this new inflow of funding, and more MFIs enter the market, securitization volumes could reach between $1bn-$3bn annually over the next decade,” says S&P.
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Gerdau Buys Venezuela Producer Zisuca
Brazilian steel-maker Gerdau has agreed to pay $92.5m for Venezuelan steel producer Siderurgica Zuliana the company said in a note to the Brazilian regulator, CVM, Monday. The company has followed an aggressive strategy of acquisitions in recent years adding steel plants in the US, Mexico and Central America. This is Gerdau’s first investment in Venezuela, which has enjoyed economic growth of more than 10% in the past two years, the steelmaker points out.
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CAF Goes for Yen Financing
CAF, the Caracas-based Andean development bank, tapped the Japanese bond market for a combined $245m worth of local currency bonds Thursday. The bank issued JPY20bn in 2010 notes at Yen Libor plus 22bp, to yield 1.67%, and JPY10bn in 2014 notes at Yen Libor+37bp to yield 2.32%. Pricing came at the tight end of guidance of 22bp-26bp and 36bp-40bp respectively. The bonds are rated A+/A+/A1 and proceeds were immediately swapped into dollars. “The spread was actually in line with our USD curve so we don’t have to pay any additional [cash] after the swap,” Gabriel Felpeto, CAF’s director of financial policy, tells LatinFinance. This is CAF’s sixth issue in Japan, the last of which came in 2005. The development bank’s financing needs for 2007 are between $800m and $1bn and so far, it has raised $600m, says Felpeto, leaving up to $400m more in potential issuance through the end of the year. The Samurai was aimed at diversification of the investor base.
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Citi Merges Bonds and Loans
Citi has consolidated its LatAm loans and DCM team into a single credit markets group led by Mario Espinosa, former head of loans, and Chris Gilfond, former co-head of DCM. They report to Ricardo Braga, head of fixed income, currency and commodities for Latin America, and Atiq-Ur Rehman, head of EM DCM. The group will combine DCM, syndicated loans, and local DCM and offer liability management, private placements, hybrid capital securities and source loan assets for distribution through EM credit trading. Carlos Corona will lead international bonds and loans coverage for Mexico, working with Humberto Cabral on the local DCM side. Brazil will be led by Sandy Severino, Eduardo Cutrim and Hamilton Agle. In the southern cone, Adrian Guzzoni, Juan Cristobal Peralta (Chile) will lead. In Central American and the Caribbean, Blake Haider and Fabian Kiel (Trinidad and Tobago) take charge. Haider will also have responsibility for the Andes, along with Adrian Guzzoni, Rocio Arbelaez (Colombia) and Denis Gray (Peru). Luis Carlos Nuñez is taking on a new role focusing on emerging and middle market companies, sourcing bond opportunities and/or assets for distribution through Citi’s credit derivative loan distribution program. He will also continue to do local market access trades. John Hartzell, former DCM co-head with Gilfond, is now head of LatAm trading.
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Credit Suisse Cleaning up in LatAm
It may not be the top of the volume league tables, but Credit Suisse is making the most money overall from M&A, DCM and ECM, Dealogic data shows. For the year to mid-May, the Swiss bank has booked almost $104m in disclosed fees. In second place is UBS, which books close to $97m, more than 80% of it from equities. The bulge bracket house with presence across the three sectors that does worst for disclosed fees ($17.2m) is Morgan Stanley. (For full tables of volume and fees, see the June issue of LatinFinance.)
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More is Less in M&A and DCM
The bank with the most deals is not the most lucrative, at least in M&A and DCM. For example, JPMorgan claims the lion’s share of the LatAm M&A volume, but it is Citi that makes the most money in that sector, Dealogic data for the year to May 15 shows. Likewise, in DCM, ABN AMRO dominates the volume, following its $7.5bn PDVSA bonanza, but the shop that is raking in the biggest fees is also Citi in that sector. Citi has roughly half the volume of ABN’s $8.4bn in proceeds, but three times the revenue of the Dutch bank, at $28m from 25 debt deals, Dealogic data shows. In M&A, it is a similar story, with JPMorgan dominating the flow ($8.7bn in transactions so far), but Citi making the most money ($27m, versus $17m for JPM.) Credit Suisse is second for M&A fees, with $18m, but comes 9th in the volume table, with $3.5bn from 8 deals, Dealogic charts show. The only real correlation is in equities, where UBS comes first for volume ($2.8bn) and also for fees ($81m). Credit Suisse is second in both ($67m from $2.7bn in issues) and Merrill comes third ($35m fees, $1.6bn proceeds.)
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Credit Suisse Tips Vitro 2012 and 2017
Credit Suisse has started coverage of the bonds of Vitro, the Mexican glassmaker that has been a repeat DCM client. It puts an outperform recommendation on the new 2012 and 2017 bonds and assigns a market perform to its 2013 bond due to its call feature. “At a yield of 7.78% (the ’12s) and 8.32% (the ’17s), we believe these bonds offer an attractive yield given our relative assessment of Vitro’s risks and returns, and a particularly attractive yield among Mexican and US HY industrials,” says Credit Suisse. The US comp is Owens-Illinois. “The main risk to our recommendation on Vitro is the potential for an acquisition oriented growth strategy that could lead to higher leverage (though bond covenants allow for a maximum of 3.5x gross leverage),” the shop adds. Challenges for Vitro include high energy costs, exposure to the auto sector and increased competition. Following the recent $1bn issue, which Credit Suisse jointly led, Vitro streamlined its capital structure and eliminated structural subordination of holdco creditors, provided subsidiary guarantees to all its holdco notes, lowered financing costs and extended maturities, and reduced refinancing risk and liquidity constraints.
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CAF, India Eximbank Sign Cooperation Agreement
The Andean Development Corporation (CAF) has signed a cooperation agreement with India’s Eximbank to further the economic and social development of the Corporation’s 17 member countries. The agreement is part of a move by the Corporation to seek attract resources, goods and experience to the region from further afield, in this case India.