Brazilian corporates won the highest marks for corporate social responsibility (CSR) and corporate governance (CG), risk, and overall sustainability, according to a LatinFinance study in association with Madrid-based consultancy Management & Excellence (M&E). The region’s largest economy again shines in relation to the rest of LatAm in the second-ever assessment of the region’s largest power, energy and oil and gas entities by market capitalization. “Sustainability has matured with a need to look beyond mere compliance,” says William Cox, managing director at M&E. This year’s rankings incorporate quantifiable sustainability performance and risk-to-compliance in order to determine whether companies are successfully implementing sustainability and not just paying lip service to it, he explains. Petrobras tops the overall scores, led not only by high compliance but by achieving a much higher mark in the performance category (which measures implementation) than peers. On the energy side, CPFL and Cemig’s scores tell a similar story. Companies like Argentina’s YPF and Chile’s Enersis fall short in performance, while OGX’s inconsistency in implementation sees it get the lowest rating. Both power and oil and gas saw a wide distribution of scores. Scores tabulated for the Mining and Telecoms sectors will be released later this year. Cox says CPFL and Petrobras score well compared to the global leaders in their sectors. He points out that CPFL’s equity price jumped by 108% between March 2009 and March 2011, while Enersis came in last in the sector, with a 34.3% rise. The two also both publish annual sustainability reports. Globally, more companies should begin to be rated according to sustainability performance, Cox says.
Category: Corporate & Sovereign Strategy
DomRep Addresses Fiscal Challenges
The Dominican Republic has been successful at a macro level at consolidating its fiscal position and deepening structural reforms, according to a JPMorgan report citing speakers at a seminar hosted by the bank. Growth surprised on the upside and the output gap closed considerably faster than expected, according to the report. The country is expected to adopt measures to help increase the tax ratio to 15% of GDP and lower the deficit. Electricity subsidies are being addressed, with the government moving from subsidizing all electricity to more targeted subsidies for the poor. The government still needs to make public spending more efficient, according to the report. While the government is removing monetary stimulus by hiking rates, speakers add that the government should also accumulate more reserves. The bank adds that foreign exchange reserves are expected to increase as metal exports reach new highs. Meanwhile, the bank expects the number of foreign visitors to the Dominican Republic to climb 4% to 3.66m in 2011.
Ramos-Francia Named Banxico Gov
The Mexican senate has ratified Manuel Ramos-Francia as deputy governor to the board of governors of Banxico, Mexico’s central bank. He will hold the position for the next eight years. Ramos-Francia was previously a central bank chief economist.
Uruguay Sets Japan Meetings
Uruguay plans to hold a group presentation for Japanese investors May 19 and expects to hold individual meetings following it, according to a government official. The sovereign had indicated plans for a Samurai transaction earlier this year, though the official declines to state any specific expectations for a deal. DCM bankers expect a deal in line with other recent LatAm Samurai bonds – in the neighborhood of JPY40bn ($480m), guaranteed by JBIC, 10 year maturity, and paying perhaps yen Libor+ 40bp-50bp. Daiwa and Nomura are managing. Panama was the most recent issuer, with a 10-year Samurai with a 1.81% coupon priced at par to yield yen Libor+48bp in January, while Mexico priced a 2020 bond guaranteed by JBIC in October which priced at par with a 1.51% coupon, to yield yen Libor plus 50bp. Uruguay’s last Japanese bond was a JPY30bn 2.23% 10-year done in 2007. In a separate statement, Uruguay’s finance ministry said it expects to reach a threshold of having 55% foreign-denominated debt this year. This is among the conditions that could see it receive an investment-grade rating this year. Uruguay is rated BB/BB/Ba1.
Growth Expected for Jamaica Remittances
JPMorgan forecasts that remittances to Jamaica will increase to almost $2.1bn in 2011, up from $1.9bn in 2010 and $1.8bn in 2009. Remittance inflows to the Caribbean country increased 5.8% in January compared to January 2010 and 10.0% in February, compared to the same month in 2010. JPMorgan says the improving trend in Jamaica’s remittances is consistent with the gradual recovery in the source markets of the US (60%) and the UK (17%), which together account for more than three fourths of total remittance inflows. Other important contributors are Canada (9%) and Cayman Islands (7%).
JPMorgan Leads IB Advisory Fees
JPMorgan leads the ranks of investment banking advisory fees, according to Dealogic. As of April 25, JPMorgan squeaked past Credit Suisse, generating $85.4m in fees for a 12.9% share of the pie, versus Credit Suisse’s $84.7, and 12.8%. CS maintains its position from a year ago, while Itau drops from the second to third spot with $81.8m in fees for 12.4% of the total. Citi maintains its position as the number 4 advisor. Overall, fees are up significantly from a year ago, reaching $661m from $528m in 2010 according to Dealogic, a 25% jump. Deutsche and Goldman, which scored the 7 and 8 spots last year, respectively, drop out of the top 10 this year, while Morgan Stanley and HSBC appeared at the 7 and 9 spots after failing to make the list by this point last year. DCM fees leapt to $173m from $137m over a year ago, a 26% increase, while ECM revenue grew to $299m from $199m a year ago, a 50% increase. MYA advisory fees, on the other hand, are down slightly to $156m from $166m in 2010. Although Credit Suisse came in first in M&A fees with $31m and 19.6% of the total, it did even not make the top 5 in ECM fee ranking. JPMorgan, meanwhile, came in second in M&A fees and took the third spot in both DCM and ECM revenues.
Panama Mortgage Bank Upgraded
Fitch has upgraded Panama’s Banco La Hipotecaria, to A from A minus on a national scale, it said in a release. The outlook on the rating is stable. The rating action reflects the strategic relevance it represents for its parent company, Grupo ASSA, says Fitch. The bank has seen an increase in clients in recent years and has always been able to count on the support of its parent company, which adds to the decision to upgrade the company, says the ratings agency. The rating also reflects the potential support Hipotecaria would get from the shareholders of Grupo ASSA, should it need it in the future, adds Fitch.
Argentina Unlikely to Sell Siderar Stake
The Argentine government is unlikely to sell its 26% stake in Siderar, according to two sector analysts. Local press had reported that Techint, which controls Siderar, has offered the Argentine government $700m for the stake, an offer the government is reported to have rejected. “The government will never sell,” says one Sao Paulo-based equity analyst. “The government is not looking at the economic part of this.” A US-based equity analyst says he is unsurprised that Techint would want to attempt to buy out the Argentine government. “The government has been more aggressive lately” in exerting influence on companies in which it holds a stake, he says. The Fernandez administration is unlikely to give up that stake in the future, he says. “I don’t think it’s about price. It’s about control.” The Sao Paulo-based analyst says the stake allows the Fernandez administration to attempt to influence steel pricing and the rate of inflation.
Moody’s Upgrades Colombia’s Chivor
AES Chivor & Cia (Chivor), a Colombian power generation company, has been upgraded by Moody’s to Ba1 from Ba2. The outlook is stable. The upgrade reflects the company’s strong financial performance and stable cashflow. This is offset by the company’s business concentration risk, as it owns a single asset with a single asset in one geographic region, adds the ratings agency. Moody’s says it expects the company to continue to report strong credit metrics, and to continue to be free cash flow positive over the near to medium term.
IFC Gives Paraguay Bank Loan
The IFC has given Paraguay’s Banco Regional a $30m long-term loan to increase financing for local and small or midsized firms. The funds are directed to firms that lack financing to invest in medium and long-term projects, it adds. SMEs generate 80% of Paraguay’s employment and 60% of the country’s GDP. The loan will enable the bank to increase operations in rural areas and extend the durations of the loans it gives.