Ecuador will buy back $740 million worth of bonds due in 2012, the government announced. A $400 million loan from the Latin American Reserve Fund and another $340 million from the December sale of 10-year bonds will finance the operation. Finance Minister Diego Borja expects the move to save $20 million a year in debt payments. The country tapped the international bond market last December for the first time since it defaulted on its foreign obligations in 1999.
Category: Bonds
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Technint Wins Mexican Contract
Argentine company Techint, together with Spanish firm Isolux, has won a $45 million contract to install a fiber-optic network in nine Mexican states. The contract was awarded by Mexico’s state-run power company Comisión Federal de Electricidad (CFE) to allow telecoms companies to extend their service across the country.
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Delegates Discuss DR-CAFTA Challenges
Temístocles Montás, technical secretary of the presidency of the Dominican Republic, addressed the challenges and opportunities facing his country and the other signatories of the DR-CAFTA free trade agreement as the keynote speaker at the first annual LatinFinance Dominican Republic-Central America conference. More than 300 delegates from the public and private sectors, as well as NGOs and multilateral banks gathered at the new Hilton hotel in Santo Domingo to discuss the opportunities and challenges afforded by the region’s nascent but evolving capital markets, the importance of a good business environment to capitalize on increased trade flows, the struggle to lower remittance costs and expand cross-border consumer finance, and the challenges faced in the energy and tourism sectors.
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Mexico To Buy Back Foreign Debt
Mexico will buy back $5 billion of its foreign-currency debt, representing 7% of all the sovereign’s foreign debt, to bring down its current interest payments. Mexico plans to exchange bonds maturing in 2007 and 2033 for a new dollar-denominated benchmark bond due to be issued in the second half of this year. Banxico will announce the face value of the new 10-year bonds on Friday.
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Brazil To Buy Back Brady Bonds
Brazil is to use its rising foreign currency reserves to buy back $6.6 billion outstanding of Brady bonds, representing 8% of the country’s foreign-currency denominated debt. The bonds, created in the 1990s as part of the Brady Plan debt restructuring program, have a call option to be repurchased at par value this April. Brazil’s foreign currency reserves have been boosted over the past year by rising exports and increased foreign investment into the country.
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PDVSA To Buy Back Dollar Debt
Venezuelan state-owned oil company PDVSA is to set aside $83 million to buy back US dollar debt. This follows comments made by PDVSA president and minister of energy, Rafael Ramírez, who said that the company will shortly cease to be registered with the SEC. Ramírez noted that PDVSA is the only national oil company to be listed and filing financial reports with the US regulator.
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CAF To Issue Sol-denominated Bonds
The Andean Development Corporation (CAF), the leading source of financing for the public sector in the Andean region, is planning to issue around $150 million worth (500 million soles) of local-currency bonds via the Lima Stock Exchange. The bonds will have a maturity of between one and 20 years and will be issued with a nominal value of 100 soles per bond. The Caracas-based development bank did not specify the date or provide any further offering details. This will be the third time CAF has issued bonds in Peru. Last July the Corporation issued $150 million of ‘Condor’ bonds, listing them simultaneously on the Lima, Quito, Guayaquil and Luxembourg exchanges. CAF first issued in Peru in 2003 to help broaden investment alternatives in the region, in particular for local institutions. BBVA will act as the bookrunner and arranger of the issue.
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IDB Ponders Bolivian Debt Forgiveness
The Inter-American Development Bank (IDB) is considering granting debt forgiveness of $1.3 billion to Bolivia. Bolivia currently owes $1.6 billion of debt to the multilateral, of which $1.3 billion is concessional debt. The IDB is pondering debt forgiveness to five countries in the region: Bolivia, Honduras, Nicaragua, Haiti and Guyana and the topic will be under discussion at the IDB’s governors’ meeting in Brazil at the start of April. At the end of last year, the International Monetary Fund forgave Bolivia’s total debt of $232.3 million; in January Spain announced it would cancel part of a $120 million Spanish loan to Bolivia to support education initiatives. And the World Bank has said it plans to start canceling $390 million of debt owed by Bolivia for the period 2007-2016 from the first half of this year.
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Brazil To Buy Back Bonds
Brazil is to concentrate on buying back bonds, specifically Brady bonds and short-term global bonds, as part of its strategy to improve its debt profile and earn a credit ratings upgrade. So far this year it has bought $2.3 million, of which it has cancelled $773.9 million. It plans to use international reserves to fund the buyback program. Standard & Poor’s currently rates Brazil’s foreign currency sovereign debt three notches below investment grade at BB-; Moody’s rates it Ba3. A proposed move to end tax on securities trading by foreign investors (see below) may also improve Brazil’s debt profile if it boosts investors’ holdings of domestic government debt. Brazil’s current debt outstanding totals between $16 billion and $20 billion.
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DR-CAFTA accord becomes topic of discussion
DR-CAFTA accord becomes topic of discussion during the upcoming Dominican Republic-Central America Forum; which will examine the extent to which the DR-CAFTA accord is accelerating the integration of the Dominican Republic and Central America into a new economic region and financial market. Speakers will also examine how regional political and economical changes will affect development, finance, investment and trade in the region. Topics will be discussed by Temístocles Montás, Presidential Technical Secretary, Dominican Republic; Roberto Zamora, President, Grupo LAFISE; Rafael Menicucci, President, Cervecería Nacional Dominicana; Marvin Taylor, BCIE, Chief Economist; Luis Armando Montenegro, Banking Superintendent, El Salvador. The inaugural Dominican Republic-Central America Forum will take place on March 9th in Santo Domingo. To learn more please visit www.latinfinance.com/drcafta