Fitch has upgraded Uruguay to BB+ from BB, revising its outlook to stable from positive. The sovereign’s improving creditworthiness is being driven by better fiscal solvency ratios, a stronger debt maturity structure and high GDP per capita income, the agency says. “Its five-year average growth increased to 6.2% in 2010, considerably higher than the ‘BB’ median over the same period. Reduced trade and financial links with Argentina make Uruguay less vulnerable to economic developments in its neighbor,” it adds. Fitch also estimates central government debt could fall to 44.1% of GDP in 2011 from 50.2% in 2008, which would put it above the ‘BB’ median.
Category: Corporate & Sovereign Strategy
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Telmex Swaps CFOs
Adolfo Cerezo has retired from his position as CFO at Mexican telecom Telmex after 33 years with the company. From August 15, he will be replaced by Carlos Robles. With Telmex since 2005, Robles has been sub-director of budgets and financial evaluation.
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Chile Expected to Pause Rate Hikes
Chile’s central bank is widely expected to keep its rate steady at 5.25% today. Goldman Sachs, meanwhile, also sees the central bank pausing now that it is no longer expected to miss its inflation target for 2011 despite an increase in fuel-energy prices. Nomura sees the rate reaching 5.50% in the next 3 months.
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Minerva Preps For Possible Upgrade
Moody’s placed Minerva’s B3 corporate family rating on review for a possible upgrade, following the announcement of a planned offering of BRL300m ($190m) in mandatorily convertible debentures. The rating could be upgraded if Moody’s expects the Brazilian beef producer to continue to diversify its revenue and cash flow streams, and reduce adjusted total debt to Ebitda to below 5.0x. Moody’s last rating action for Minerva occurred January 13 when it changed the corporate family rating outlook to positive from stable. This reflected the rating agency’s view that Minerva would continue to deleverage, manage Capex and expand processed food revenues.
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Metrogas Files Proposal to Creditors
Argentina’s Metrogas has filed a debt restructuring proposal involving the issuance of new bonds. The utility is offering both commercial lenders and bondholders new bonds for a dollar amount representing 45% of the approximately $250m that creditors claim. The new 14-year will pay 4.0% and amortize at 1.0% per year in years 3-14. Timing and further details are to be disclosed at a bondholder meeting, which has yet to be scheduled. Banco Macro is advising. Metrogas, 70% owned by a BG and Repsol YPF consortium, sought bankruptcy protection last year after an 11-year government rate freeze had damaged the company’s finances.
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Panamericano Upgraded by Fitch
Brazil’s Banco Panamericano had its national rating upgraded to AA minus from A minus with a stable outlook by Fitch. The rating reflects BTG Pactual’s support, as well as the benefit of having Caixa Economica Federal as the shareholder and main funder. Panamericano was taken over by BTG and Caixa from Grupo Silvio Santos in February following the discovery in November of accounting irregularities.
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Mexican Airlines Expect Significant Growth
The Mexican airline sector is expecting significant growth after the exit of several competitors, according to industry executives. “There is a new market structure in Mexico and we expect the market to grow,” Aeromexico CFO Ricardo Sanchez Baker tells LatinFinance. “There is less uncertainty and all the airlines are making investments.” Mexico’s population of 113m could generate around 170m trips per year, following the model of airline traffic in other countries. Instead, Mexico generates only 50m trips per year, according to the International Air Transport Association. “The case was similar in Brazil in 2005,” Sanchez says. “There is still a lot to do to catch up, but the market is growing.” Sanchez adds that he expects passenger numbers to increase by 1.7x the rate of overall economic growth. “There is also huge potential in offering low-cost airfares to a market that travels by bus,” says Mauro Castillo, CFO of local airline Viva Aerobus. “Of the 107 million people in Mexico, 96% are transported by bus and only 4% fly. The opportunity is huge.”
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BAML Loses M&A Banker
M&A banker David Panico has left BAML in Sao Paulo, where he focused on the utilities sector. Panico is currently on garden leave, and is heard to be joining Citi as an MD, where he will work for Andre Kok.
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Peru Keeps Rates Steady
Peru’s central bank maintained its rate at 4.25% Thursday in-line with expectations. Still this doesn’t necessarily mean that monetary authorities won’t eventually take a more hawkish stance, with Citi forecasting rates to hit 4.5% by year’s end.
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Credit Agricole Grows Origination Team
Credit Agricole has hired Federico Fiorentini as part of its origination and structuring team for LatAm. He will report to Jean-Philippe Adam. Fiorentini left HSBC in June of last year where he had been head of LatAm loan origination. The addition follows Agricole’s hire of Jaime Frontera to its LatAm loans syndication team in March.