Citi Merges Bonds and LoansCiti 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, […]
Category: Bonds
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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.
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Ron Dadina Joins Bear Stearns
MBIA veteran Ron Dadina started at Bear Stearns Monday. He has been appointed managing director in the DCM department, reporting to Ajata Mediratta. Bear is building up a niche in construction finance, following its success last year with Cap Cana, a $250m 9.625% of 2013 to build a luxury resort in the DR. Dadina was a director in MBIA’s global corporate structured finance group responsible for global origination, analysis and execution of future flow deals. The financial guarantor did issues with CVRD, Bradesco and Mexico’s Toluca toll road, among other Latin issues.
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Bladex, China Development Bank Sign Cooperation Agreement
Panama’s Banco Latinoamericano de Exportaciones (Bladex) has signed a Cooperation Agreement with the China Development Bank (CDB) with a focus on trade and infrastructure projects in Latin America. Jaime Rivera, chief executive officer of Bladex, commented: “Bladex is committed to fostering trade and enhancing business flows between China and Latin America as a means of fulfilling its commitment to the well-being of our Region while adding significant value to our company.”
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IDB Grants $120m For Bolivia Highways Project
The IDB has granted a loan of $120m towards the construction of the “Northern Corridor” highway network in Bolivia. The 40-year credit will carry an annual interest below 2%. The money will finance the stretches between Santa Bárbara (La Paz) and Rurrenabaque (Beni). Construction, repair and improvement of the 377km will take around six years once the tender process has been completed, according to the Bolivian highways agency. The project is aimed at opening up access to the isolated Amazon region of the country.
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IDB Appoints New VP For Countries
The Inter-American Development Bank (IDB) has appointed Otaviano Canuto – currently Brazilian director to the World Bank – as vice-president for Countries for a three-year term. Canuto will take charge of the four Country Departments covering the regions in which the IDB divides its operations in Latin America and the Caribbean, 26 Country Offices, and the Operations Procurement Office, said the Bank in a statement. Prior to joining the World Bank in 2004, Canuto served as director of international affairs at the ministry of finance of Brazil.
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Brazil To Set Up PPP Planning Fund
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.