HSBC has appointed Andre Loes as chief LatAm economist, which is a new role. He will be based in Brazil, and will continue is his current role as chief economist for Brazil. The economics teams in Brazil, Mexico and Argentina will report to him. Loes will report to Patrick Boucher, head of research for the Americas, and functionally to Stephen King, HSBC chief economist. Loes joined HSBC in August 2008, in the role as chief economist for Brazil. Before that he spent 8 years at Santander Brazil.
Category: Corporate & Sovereign Strategy
Posted inDaily Brief
BdB Wins Post Office Bidding
Banco do Brasil said it won a BRL2.8bn ($1.8bn) tender offer to operate a network of banks through the country’s postal service, it said in a filing on the CVM. The contract will allow BdB to operate in 6,195 post offices throughout the country.
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Colombia Upgraded to Investment Grade by Moody’s
Colombia saw its sovereign credit rating upgraded to Baa3 from Ba1 by Moody’s, the second investment grade rating for the sovereign after S&P made the move in March. Fitch has the sovereign on a positive outlook. Moody’s cites Colombia’s proven ability to deal with internal and external shocks, and steady reductions in the threat posed by guerrilla groups and organized crime. “The country’s institutional framework is well placed to deal with an expected commodities-driven revenue increase in coming years,” according to the agency. General government debt-to-GDP has stabilized at around 37% after falling 10% from 2003 to 2007, comparing favorably with other Baa-rated sovereigns. Colombia has also shown median GDP growth in the last decade higher than the Baa average. According to a ratings note by RBC, the move came earlier than the market had expected. RBC says the move “will open up the country to a potentially much wider pool of foreign institutional investors, who in many cases require at least 2 rating agencies to rate a country IG before they can allocate money there.” The bank says the move will lower funding costs for the sovereign and local corporates and increase portfolio investment. Goldman Sachs says it expects Fitch to follow suit soon, likely after the approval of fiscal reforms currently being debated in Congress.
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Satmex Exits Bankruptcy
On the back of last Month’s $325m bond sale, Satmex has officially emerged from bankruptcy, it says. Under the Mexican communication company’s prepackaged plan, Satmex’s used proceeds from the new bond sale, now its only outstanding indebtedness, to repay 2011 bondholders in full. The remaining net proceeds from the sale and the proceeds of a completed $96.25m equity rights offering to holders of Satmex’s 2013 bonds will be used to fund the completion of the Satmex 8 satellite. If all goes according to plan for the twice-bankrupt satellite operator, Satmex 8 will be launched in 2012 to replace the Satmex 5 satellite. Said to capitalize on US high-yield dedicated investor interest, the 9.50% 2017 NC3 bond received more than $2.5bn in orders from 150 accounts in the sale held the first week of May. Jeffries managed the bond sale. Lazard and Alfaro, Davila y Rios served as financial advisors to Satmex. Satmex had previously entered bankruptcy protection in 2006.
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Banxico Keeps Rates Steady
Mexico’s central bank kept its rate steady at 4.5%, in-line with consensus estimates. Citi cites improving outlook for inflation risk and economic slackness as reasons for the bank not hiking rates. Citi says it expects the first rate hike to take place in October. Credit Suisse, meanwhile, says it believes Mexico will not increase its rate until December, while Barclays expects that it will wait until January 2012.
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Colombia Raises Rate
Colombia’s central bank raised its rate Monday by 25bp to 4.00%, inline with market expectations. According to Credit Suisse, inflation has come in below expectations and expects the bank to end the year with a 5.00% rate. Citi says the bank will continue to raise rates as part of its monetary policy normalization scheme.
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Half of PDVSA Board Replaced
Petroleos de Venezuela has replaced five of its directors of its board, according to a decree in the country’s official gazette. Eudomario Carruyo, head of finance, Luis Pulido, internal director of production, Fadi Kabboul, planning director, Hercilio Rivas, research director and Carlos Vallejo, head of gas, were removed from their posts. Orlando Chacin, Jesus Luongo, Ower Manrique and Victor Aular have been appointed as new board members, says the decree. Jorge Giordani, finance minister, Nicolas Maduro, foreign minister and Will Rangel were added as external directors. Rafael Dario Ramirez retains his post as president, as do vice presidents Asdrubal Chavez and Eugelio del Pino, and director Ricardo Coronado, says the decree.
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Sul America Changed to Outlook Positive
Brazil’s Sul America, the holding company of insurance group Sul America Seguros, has had its rating revised to positive from stable by Fitch, said the ratings agency in a release. The company’s rating is affirmed at BB+. The change in outlook was due to consistent operating performance despite increasing competition and the termination of a joint venture with Banco do Brasil. For a ratings upgrade the company would need to consolidate recent expansions, have stable performance in terms of claims ratios and increased overall profitability, according to Fitch.
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OAS Construtora Downgraded by Fitch
Fitch downgraded OAS Construtora’s IDR to B from B+. The downgrade is the result of a substantial increase in leverage, including debt issued at the parent company, OAS Participacoes, Fitch says. Cost overruns in certain construction projects concluded in the second half of last year led to a sharp reduction in Ebitda generation.
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Brazil Housing Market Unlikely to Consolidate
Despite the fragmented nature of the Brazilian housing market, the sector is unlikely to experience significant consolidation in the near term. Alceu Duilio Calciolari, CEO of Brazilian homebuilder Gafisa, tells LatinFinance that although the market remains highly fragmented, many of the smaller companies are family-owned or have a controlling shareholder who is unlikely to sell. Duilio says he expects to see only one or two deals this year. While Gafisa is unlikely to participate, he says the company does see opportunities for project acquisitions. The company may also choose to access the local debt markets, Duilio says, although would limit itself to raising a maximum of 10% of its current net debt of BRL3.7bn ($2.27bn). Garfisa most recently went to the local debt markets in 2010 with a BRL300m ($184m) non-convertible debenture led by Santander. It also raised BRL1.06bn ($650m) in an equity follow-on last year.