Peru’s cement sector is growing at a record pace, according to the Association of Cement Producers (Asocem). The country needs approximately $38bn of investment in the next 5 years in energy, sanitation and transportation infrastructure to ensure annual economic growth of 6% or more. Meanwhile, Peru faces a deficit of 1.2m housing units as of the start of 2011, according to the Peruvian Construction Chamber (Capeco). The twin deficits, on top of forecasts of more than $56bn in new mining and energy projects through 2020, is fueling significant growth. Cement consumption in November 2010 jumped 22.9%, to 754,422 metric tons compared to the same month in 2009. In 2010, cement dispatched from the 7 companies with factories in Peru reached 8.1m metric tons, 15.1% more than 2009, according to Ascocem. This year, the cement sector is expected to grow by 12% in the first quarter, slower than for the corresponding period in 2009, according to Pablo Nano, a sector analyst with the economic research unit of the Peruvian branch of Canada’s Scotiabank. “There is dynamic growth [in the cement market] with rates well above 10% annually,” says Juan Carolos Cardenas, general manager of Mexico’s Cemex in Peru.
Category: Corporate & Sovereign Strategy
Remittances to LatAm, Caribbean Increasing
Remittances to LatAm and the Caribbean are likely to rise this year after stabilizing in 2010, according to the IDB’s Multilateral Investment Fund. Measured in USD, money transfers made by LatAm and Caribbean migrants to their countries of origin reached $58.9bn in 2010, virtually unchanged from $58.8bn in 2009, when remittances saw a 15% drop due to the effects of the global economic crisis, the MIF says. Although remittances stabilized in 2010, the MIF says they increased in some sub-regions. Transfers to CentAm jumped 3.1% while those to Haiti increased 20%, largely due to the humanitarian crisis caused by the earthquake. “Remittances to LatAm and the Caribbean are likely to continue rising in volume in 2011, although still below the double-digit rates they attained in years prior to the global crisis,” the MIF says, adding that the pace of growth will depend principally on how strongly the job markets in source countries such as the US and Spain recover.
S&P Upgrades Colombia to Investment Grade
S&P has upgraded Colombia’s sovereign ratings to BBB minus/A-3 from BB+/B, bringing it to investment grade territory. The outlook is stable. S&P cites the growing resilience of Colombia’s economy to withstand external shocks and political consensus on market-oriented economic policies. “The country’s overall net external creditor position is projected to strengthen modestly in the coming years, while the public sector’s debt burden – as measured by its share of GDP – will likely stabilize,” the agency says. S&P is the first of the rating agencies to promote Colombia to investment grade, but Moody’s and Fitch are expected to do so soon. “We expect Fitch and Moody’s to give Colombia an investment grade rating before the end of the first quarter,” says Bancolombia. Moody’s has said it could upgrade Colombia before the summer. It has a Ba1 rating for the sovereign. Fitch, meanwhile, has said that it is assessing the effect of rising oil and mining production on Colombia’s fiscal and external accounts. It has a BB+ rating for Colombia.
Vicario Named BAML Director
Fernando Vicario has been named director of corporate banking for emerging markets excluding Asia at Bank of America Merrill Lynch in what will be a new position. Vicario will be based in London and report directly to Andrea Orcel, executive chairman of global banking and markets, and Joel Van Dusen, global president of corporate banking coverage. Vicario has been with BAML since 1995.
DomRep Power Could Suffer Oil Shock
The Dominican Republic’s power generation sector is highly exposed to rising oil prices, according to Fitch. The vast majority of the country’s power, 82% of installed generation, comes from fuel oil and natural gas-fired thermoelectric plants, it says. That makes it the most highly exposed country in the CentAm and Caribbean. El Salvador comes in second place, as nearly 70% of power generation comes from fossil fuels, Fitch says. Less exposed to rising energy prices are Costa Rica, where 72% of power comes from renewable resources, and Panama, where 50% of total capacity is provided by hydroelectric sources. On average, the power generation system in CentAm generates more than half (54%) of its electricity is generated by thermoelectric sources, says Fitch. This exposure could translate into higher expenses this year. “Prices could briefly surpass $140 per barrel within the next 3 months,” Bank of America Merrill Lynch says. It expects the price of oil to average $108 per barrel for the year.
Edesur Names CEO
Argentine electric distributor Edesur has named Antonio Jerez as CEO, it says. Jerez had been director of distribution at one of the Spanish units of Edesur’s parent Endesa. Jose Maria Hidalgo had been occupying the CEO role, and is set to become chairman of Edesur, pending shareholder approval. Hidalgo is a former CEO of Endesa Argentina.
Frontera Leaves Barclays
Jaime Frontera has left as head of LatAm loans syndication at Barclays Capital. He is heard to be joining Credit Agricole’s syndicated loans team. Credit Agricole in September 2010 lost Rodrigo Gracia, who left his role as VP in the syndicated loans team to join the syndicated loans team at JPMorgan.
Oi Sees Ratings Upgrade from Fitch
Oi saw its rating raised to BBB from BBB minus by Fitch, with its outlook revised to stable from positive. The upgrade reflects the progress Oi has made toward a long-term target of net debt-to-Ebitda of 1.7x.
China Increasing Ties to CentAm
CentAm government are seeing increased economic and commercial ties to China following improved diplomatic relations which are beginning to bear fruit. Costa Rica boasts a $100m new arena deemed a “gift” from the Chinese government since the two countries established diplomatic relations in 2007. The world’s second largest economy is beginning to make its way into El Salvador, Guatemala, Honduras, Nicaragua and Panama as well. In October, El Salvador hosted its first-ever Chinese business symposium in San Salvador, with 52 Chinese companies and 150 local firms attending. “We hope that this event represents the beginning of a much improved commercial relationship between El Salvador and the Republic of China,” says Manuel Flores, president of the Salvadorian Friendship Association with China. “We consume infinite amounts of Chinese products, while they know very little about ours. We hope to begin to change that,” he adds. Meanwhile, in September China’s state-owned energy company Sinohydro signed an “understanding agreement” with the government of Honduras to manage and operate construction of 3 hydroelectric plants in western Honduras known as Patuca I, II and III.
Localiza Roadshows as Fully Investment Grade
Moody’s has lifted Localiza’s ratings to Baa3 from Ba1, it says, moving it out of split-rated territory ahead of a possible new international bond sale. The Baa3/BBB minus Brazilian car rental agency is meeting US and European investors through Tuesday, ahead of a possible USD or global BRL issue. BAML, Bradesco, Citi and Itau are managing. Though an experienced domestic market issuer, Localiza’s last cross-border bond was a $100m 8-year sold in 1997, according to Dealogic. The Moody’s outlook is stable.