Moody’s has downgraded the State of Quintana Roo to Ba2 from Ba1 on a global scale and has revised the outlook to negative from stable. The downgrade reflects the deterioration of the state’s financial performance, including sizeable fiscal deficits in the last 2 years, recent increases in the level of debt and a contraction in net working capital. The state faces significant challenges to address its finances in the near to medium term, Moody’s says. The rating could also be downgraded further if the state does not refinance its short-term debt with longer-term debt. The ratings agency also downgraded the ratings of 7 loans given to the state, via Idefin, as the performance of the loans could be affected. Idefin is a quasi-government institution created by the state of Quintana Roo to assist the state and municipalities to access credit. The loans were downgrade to Aa3 from Aa2 on a national scale. The loans total MXP4bn and come from Banamex, Banorte, HSBC, Interacciones and Scotiabank.
Category: Corporate & Sovereign Strategy
Vale Holders Aim to Replace Angelli
Valepar, the controlling shareholder of Vale, has hired a headhunter to find a new CEO for the Brazilian miner, it says in an announcement Friday. The announcement confirms long-standing market rumors that shareholders were unhappy with current chief Roger Agnelli. Agnelli’s term expires in May, and Brazil’s government has criticized him for not having spent enough on Brazilian projects. Brazil’s government holds direct and indirect stakes in Vale, and has argued that Agnelli should invest more in areas such as steel, shipbuilding and fertilizer in order to create jobs in Brazil. Government-related pension funds Funcef, Previ, Petros and Funcesp own 49% percent of Valepar, with other holders including the BNDESpar investment unit of government development bank BNDES. Apart from these stakes, the government also owns 12 “golden shares” in Vale that give it veto powers over certain key decisions including changing the location of the company´s headquarters or its corporate purposes.
Rebranding Mexican Mortgages
Mexican mortgages face an image problem after a rough few years. Getting the sector functioning again is essential to
attracting sufficient funds to tackle a looming crisis.
Pemex: Paying Up For Production
Pemex has been making changes to try and resuscitate oil output. They may not be enough to fully exploit Mexico’s potentially huge untapped resources.
Mexican Economy in Sweet Spot
Mexico’s macroeconomic environment is in good shape, but reforms are required to draw further investment. The drug war weighs on GDP expansion.
Peru Cement Industry Booms
Peru’s solid economic performance puts pressure on both government and private sector to ramp up infrastructure projects to keep the boom going. Building material demand is surging.
Peru Project Finance: Make it Rain
Odebrecht is using an auction structure to bring private-public financing to a Peruvian infrastructure project. The financing format may be used elsewhere in LatAm.
Argentina Agribusiness: Feed the World
Demand for agricultural commodities is rising fast, propelling Argentine producers. However, they require significant investment to fully tap the country’s potential.
Chilean Retail Comes Off Boil
Chilean retailers have unveiled aggressive expansion plans for 2011. Bottom line growth and stock performance are not expected to hit last year’s heady pace.
Guatemala Hikes Rate
Guatemala’s central bank tightened its rate by 25bp to 4.75%, the first revision since September 2009. The bank cites stronger-than-expected recoveries in advanced economies, favorable domestic growth, and the belief that the spike in international commodities prices reflects a long-term trend. JPMorgan believes the central bank is prioritizing inflation containment over fostering growth and curbing ongoing FX appreciation pressures.