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.
Category: Bonds
Infrastructure Ratings Agency For Mexico
The US and Mexico have said they are keen to see an infrastructure ratings agency established to rate large building projects in Mexico. The agency could potentially be set up with support from the IDB and would improve information for investors and help increase flows of capital to the country’s infrastructure projects. Following a meeting last week, US Treasury Secretary John Snow and Mexican Finance Minister Francisco Gil said they would like to see a multilateral agency set up to help foster infrastructure development and speed Mexico’s economic growth.
$350 Million Multilateral Loans To Peru
Peru is to receive $350 million of multilateral loans after the World Bank and the IDB approved credits of $150 million and $200 million, respectively. The World Bank loan is aimed at helping the government to decentralize public services; the IDB loan is directed at supporting government efforts to increase investment and setting up joint ventures with the private sector.
Ecuador May Sell More Bonds; Will Buy Back $250 Million Debt
Following the success of its return to the international debt capital markets on Wednesday when it sold $650 million 10-year bonds, Ecuador is considering a further bond issuance. The sovereign said its offering was twice oversubscribed. As planned, Ecuador will use the funds to buy back $250 million, or two years’ worth, of its global 2012 bond (it is obliged under its default terms to repurchase at least $125 million every year from next year). It also plans to used the money raised to help buy back $600 million of local short-term debt to aid liquidity.
Mexico IPAB To Buy Back 10 Billion Pesos Bonds
IPAB, The Institute for the Protection of Bank Savings, in Mexico is planning to buy back up 10 billion pesos ($955 million) before month-end. IPAB is looking to extend out its debt profile by lowering the amount of debt maturing in the second half of next year.
Ecuador To Buy Back Global Bonds
Ecuador is planning to buy back some of its global 2012 bonds with some of the money it raises from a forthcoming sovereign debt issue. As part of the most recent renegotiation of its external debt, the sovereign must buy back at least 10% of the $1.250 billion global 2012 bonds outstanding.
Brazil Cosan IPO Suspended
Brazil’s securities market regulator, CVM, has issued a two-week suspension of the flotation of the country’s largest sugar and ethanol producer, Cosan SA, citing a violation of the “quiet period”. This period forbids a company from making a public statement regarding its offering. Cosan’s shares were due to be listed on Bovespa this Thursday. The IPO is aimed at local and foreign investors. The offer is being arranged by Morgan Stanley.
Venezuelan Yields Continue To Slide
The yield on Venezuelan benchmark 91-day bonds fell to 8.4% at yesterday’s auction from 8.58% last week. Yields on government paper continue to slide down towards 8% as foreign exchange currency controls and a lack of alternative investments lead investors to choose government bonds in a market of rising oil prices and government spending. Currency controls were brought in two years ago but last week the government announced penalties for transactions in the parallel currency market.
CAF Agrees $290 Million Loan To Venezuela
The Andean Development Corporation (CAF), considered the financial arm of the Andean Community, has agreed loans of $290 million to Venezuela for development in the areas of transport, agriculture, drinking water, trade and technology. Projects being financed include a railway between Caracas and the state of Miranda.
IDB Issues $93 Million Bond In Mexico
The Inter-American Development Bank (IDB) has issued a 10-year local-currency bond for Ps1 billion ($93 million) in the Mexican market, offering a rate of 8.67%. In Mexico 65% of the issue was taken up by Afores (pension funds) and the rest by foreign investors. The issue was oversubscribed by Ps1.3 billion and was led by HSBC. The IDB issued a three-year peso-denominated bond in Mexico last year for Ps3 billion paying 6.59% per annum. Following this issue, the Bank launched local-currency bonds in Colombia, Brazil, Chile and Peru, helping to develop an international market in Latin American paper. Former Colombian diplomat, Luis Alberto Moreno, officially took over as IDB president yesterday following the resignation earlier in the year of Enrique Iglesias who headed up the Bank for 17 years.