Category: Corporate & Sovereign Strategy

In a surprise move, Mexico’s central bank has raised the floor on the overnight rate by 25bp to 7.50%. Most analysts were expecting no change. The bank abandoned the tightening bias but said it was on the lookout for inflation. “Today’s decision will strengthen the central bank’s credibility, particularly as it comes less than one week before the Fed is widely expected to cut rates again,” says Credit Suisse in a Friday report.

Brazilian miner MMX has withdrawn plans for a primary share offering filed with the CVM September 5. Instead, it plans to take out a $400m standby credit facility, after receiving offers for separate credit lines from two banks. According to Bradesco analyst Raphael Biderman, this is a good move by management as the company has $75m in net cash currently on their balance sheet. Bradesco reiterated a buy recommendation following the news.

Brazil’s Comissão de Valores Mobiliários has moved to increase the price Ultrapar Participações will offer for Petroleo Ipiranga shares it doesn’t own by 10.9% to BRL64.43 per share. The decision, subject to the approval of the CVM’s board, was taken in response to minority shareholders’ plea that there was a double discount on the CBPI valuation calculation, preventing them from accessing part of the premium paid to the controlling shareholders. The CVM also confirmed the registration for the public acquisition offerings for subsidiaries Distribuidora de Produtos de Petroleo Ipiranga and Refinaria de Petróleo Ipiranga shares at BRL112.07 and BRL106.28, respectively, the same values from the Ipiranga deal announcement. Ultrapar, Petrobras and Braskem agreed in March to buy Ipiranga group, which includes the oil company, for $4bn. Ultrapar is required under Brazilian law to make a follow-on offer to minority shareholders.

Real estate developer Klabin Segall has filed a BRL300m debentures program with the CVM, of which BRL150m should be issued in the coming months. Pricing and tenor have not yet been disclosed to the market. Itaú BBA is bookrunner, with HSBC and Santander as joint lead managers.

Indian software firm Infosys has opened a LatAm headquarters in Monterrey, Mexico. The subsidiary will provide business consulting and information technology services for industries including banking, financial services, retail, consumer packaged goods, resource, energy and utilities. It will also serve as the firm’s development center for the region. Infosys chose Mexico over other countries in LatAm and the Caribbean because of the broad language skills available, geographical proximity to Canada, the US and Europe, and because many Infosys clients have operations there already. Infosys has appointed Mohit Joshi to head the new subsidiary. Joshi, formerly a group engagement manager with the company’s banking and capital markets organization, has more than 12 years of client and leadership experience. The Mexico operation will employee around 250 people, from Mexico and other countries, in its firm year of operation, ramping up to nearly 1,000 employees in its third year.

Brazil’s SEC, the CVM, is considering taking action against Brazilian sugar refiner Cosan, which is reorganizing to incorporate in Bermuda, according to a report in Brazilian daily Estado de São Paulo. Cosan raised $1.05bn with its US IPO and Brazilian market follow-own last Thursday via Credit Suisse, Goldman and Morgan Stanley. According to Estado, the CVM is trying to determine if the company’s proposed shareholder reorganization violates the rules of the Novo Mercado and the recently updated laws governing corporations. Potential penalties reportedly include a $30m fine and dismissal of board members. Under Cosan’s reorganization, controlling shareholder Rubens Ometto will receive 10 votes for each share, ensuring control of Cosan with just 10% of Cosan’s stock. In addition, any deals done in the US would not require Brazilian shareholder approval. The CVM has set a deadline of this Thursday for minority shareholders in Cosan SA, the Brazilian company, to decide whether to participate in the public exchange offering for shares in Cosan Ltd., based in Bermuda.