Category: Bonds

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.

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.

FMO, the international development bank of the Netherlands, together with the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB) have signed for a local-currency fund (Locfund) to offer financing to micro and small businesses in Central America and the Caribbean. FMO will finance the new facility through its MASSIF fund, which provides venture capital and loans in local currency to banks in developing countries, so that the can serve local micro and small businesses and consumers more effectively.

CAF has wrapped up a VEB450 billion ($210 million) bond program through Citigroup, with a VEB128 billion issue of 12-year notes. The deal was the third in a series which started in June 2006.

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.