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.
Category: Corporate & Sovereign Strategy
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Moody’s Positive on Brasil Foods
Moody’s has changed the outlook of Brasil Foods’ Ba1 rating to positive from stable. The ratings agency cites margin improvement in FY2010 following the acquisition of Sadia in 2009 and the expectations that business performance and margin trends will remain favorable. The change in outlook incorporates the increasing proportion of value-added processed foods in the sales mix, Moody’s says. Processed food accounted for almost 60% of total sales in 2010. Brasil Foods is one of the largest food processors in LatAm with 63 plants and FY2010 net revenues of BRL22.7bn.
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Satmex Readies New Bond
Mexico’s Satmex is preparing to sell $325m in new 2017 NC3 bonds to replace exit financing it received in February to support a bankruptcy reorganization plan that was accepted by courts last week. According to investors, the satellite operator plans to use proceeds to pay off creditors and to help launch a new satellite. It will meet investors in London and Miami this week, with less defined plans to visit the rest of the US next week, investors say. Under the reorganization plan, accepted by more than 66% of holders of the company’s 2013 bonds in March, Satmex plans to pay holders of its first-priority 2011 bonds at par plus accrued interest. Holders of Satmex’s second-priority 2013 bonds would receive their pro rata share of a pool of equity interests in the indirect parent of reorganized Satmex and participate in a priority rights offering of up to $96.25m, but only to the extent that existing holders exercised their primary rights. Alternatively, 2013 holders may elect to receive a cash payment of 38 cents per dollar. Proceeds of the exit financing and rights offering will also be used to fund completion of Satmex 8, a satellite scheduled to be launched in 2012 to replace the Satmex 5 satellite. When assigning a B3 rating to the new bonds, Moody’s notes a small $129m annual revenue size and high operating risk arising from the construction and launch of Satmex 8. The risk is somewhat mitigated by an insurance policy that pays bondholders if Satmex 8 fails to launch, the agency says. Following the new bond sale, Moody’s says Satmex’s capital structure would be composed of $316m in shareholders’ equity and $325m in debt, providing a “comfortable” debt maturity profile and an “adequate” liquidity profile. Lazard has been advising Satmex. Bondholders rejected a takeover bid for the company worth up to $375m last year from EchoStar and MVS Comunicaciones. It is Satmex’s second time requesting bankruptcy protection, following a petition in 2006 from which it exited
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EM Bonds on Inflow Streak
EM bond funds posted inflows of $306m in the week ended April 13, their third straight week of inflows, EPFR Global says. “Those funds with local and hard currency mandates took in similar amounts of fresh money, with retail investors net contributors for the fourth week in a row — that more than offset redemptions from blend funds,” it says. Meanwhile, Lipper data show that performance was positive. EM debt funds gained 2.78% in the week and are up 0.11% year-to-date global income funds are up 0.48% in the week and 2.25% ytd and international income funds are up 0.98% in the week and 2.86% ytd.
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LatAm Equities Shed Funds
In the week ended April 13, LatAm equity funds shed $163m, according to EPFR Global, which says this is the 12th time in the past 13 weeks the funds experienced redemptions. The funds “ran into fresh headwinds as Brazil expanded its capital controls and nationalist Ollanta Humala, seen by many as a man in the same mold as the current leaders of Venezuela and Bolivia, emerged as one of the two candidates for June’s run-off for Peru’s presidency,” it says. Brazil funds saw outflows of $89m and GEM funds gained $1.6bn. As for performance, Lipper data show a weakening in LatAm funds, which were down 3.08% in the week ended April 14 and down 1.80% year-to-date. EM funds were down 1.43% in the week, but are still up 1.85% ytd. Global small and mid-cap funds dropped 0.85% in the week, but are still up 4.25% ytd.
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LatAm External Issuance to Decline
External bond issuance is likely to decline to below $12bn this year, according to Moody’s. The ratings agency says the financing needs of LatAm and Caribbean sovereigns will total an estimated $384bn in 2011, down from $410bn in 2010. Sovereigns will need to finance an average of 5.8% of GDP in 2011, down from 9.2% in 2009. The decline is mainly due to an increase in nominal GDP, and Moody’s expects continued economic growth and moderate fiscal results, which bodes well for future levels of financing requirements. The ratings agency says domestic funding by governments continues to rise. In 2011, the rating agency estimates that only 6.2% of funding needs in its sample will be sourced externally, down from 9.8% in 2009. External bond issuance is likely to be below $12bn this year, also on a declining trend. Mexico, has the largest 2011 funding needs at 11.1% of GDP, Peru has one of the lowest funding needs at only 0.5% of GDP.
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Lupatech Names CFO
Brazil’s Lupatech has named Alexandre Monteiro as financial vice president and investor relations officer, it says. He replaces Tiago Alonso de Oliveira, who left the maker of components for the oil industry this week. Monteiro joins from infrastructure company Grupo Libra, where he was executive director for finance and planning.
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Oi CEO to Depart in June
Luiz Eduardo Falco, CEO of Brazil telecom Oi, will leave the company by the end of June, a company spokesman says. The company is in the process of looking for replacement candidates.
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Cemex Replaces CFO and Reorganizes
Cemex will appoint Fernando Gonzalez, executive VP of finance and administration to replace Rodrigo Trevino as CFO. It will also reorganized its operations into 6 regions, which will be headed up by executives that have all previously held senior level positions within Cemex. Juan Romero will become president of Cemex Mexico and will also oversee global technology, Karl Watson will become president of Cemex USA, Jaime Elizondo will take the role of president of Cemex South America and the Caribbean, and will also oversee global procurement, Ignacio Madridejos will be president of Cemex Northern Europe, and will also oversee global energy and sustainability, Jaime Muguiro will be president of Cemex Mediterranean and Joaquin Estrada will become president of Cemex Asia and will also oversee global trading. Juan Pablo San Agustin will be executive VP for strategic planning and business development and Luis Hernandez will be executive VP for organization and human resources. The executives will all report to CEO Lorenzo Zembrano and they will make up the executive committee.
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Vitro Gets Bankruptcy
A Mexican court has approved a voluntary prepackaged bankruptcy for Mexico’s Vitro and the company has entered bankruptcy protection, Vitro says. The glassmaker, which has been fighting with creditors over plans to restructure about $3.4bn in debt, won the appeal after its bankruptcy petition initially was rejected in January. Some of Vitro’s creditors had previously rejected restructuring proposals and had filed involuntary bankruptcy petitions against the company. Vitro last week said some of its US subsidiaries were seeking Chapter 11 bankruptcy protection in a US court and asked the court to allow it to sell all of its assets to Grey Mountain Partners, a US PE firm. Vitro America also requested a $30m DIP financing from Bank of America Merrill Lynch and an additional $7.5m from Vitro.