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.
Category: Bonds
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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
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First Local Currency Issue For Cabei
The Central American Bank for Economic Integration (Cabei) has issued its first local currency-denominated bonds in a Latin American market, with a 460 billion Colombian peso offering ($203 million). The bonds, which mature 15 September 2015 were issued with an interest rate equivalent to inflation plus 2.3%. The multilateral issuer, rated A2 by Moody’s, has been looking to issue in the region to take advantage of the favorable market conditions and good investor appetite.
Posted inDaily Brief
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 http://www.latinfinance.com/default.asp?Page=3&ISS=20912&SID=596478
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IDB To Launch Mexican-denominated Paper
The Inter-American Development Bank (IDB) is planning to issue global bonds denominated in Mexican pesos. The amount to be issued is reported to be equivalent to around $240 million. The last time the IDB issued peso-denominated paper was last October when it sold Ps1 billion ($93 million) of 10-year securities offering a rate of 8.67%. In 1994 the bank became the first international issuer to launch a global bond denominated in Mexican pesos. The upcoming deal will be arranged by Credit Suisse.
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Ecuador To Buy Back Up To $650 Million Debt
Ecuador is to buy back between $400 million and $650 million, or just over five years’ worth, of its global 2012 bond by May next year (it is obliged under its default terms to repurchase at least $125 million every year from 2006). The sovereign wants to lower its debt financing costs and the interest rates on the 2012 are proving costly. If it does buy back $650 million of the bonds, it will save itself $17 million over the next five years. Ecuador will finance the buyback using part of the money raised from its recent international bond issuance together with a loan of $400 million from the Latin American Reserve Fund (FLAR). The government has so far used $257 million of the $650 million raised from the international issuance to make domestic and external debt payments.