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.
Category: Corporate & Sovereign Strategy
Posted inDaily Brief
Deutsche LatAm M&A Head Leaves
Stephen Cunningham, head of corporate finance and M&A for LatAm at Deutsche, has left the bank, according to sources familiar with the matter. They did not know where he is going next. Cunningham joined Deutsche in 2006 after 10 years at Morgan Stanley, where he was head of investment banking of Latin America. Before that, he worked at Bear Stearns. Deutsche bank has yet to name a replacement for Cunningham.
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Fitch Ups Uruguay’s NBC to Investment-Grade
Fitch has upgraded Uruguayan lender Nuevo Banco Comercial (NBC) to BBB minus from BB minus now that Bank of Nova Scotia has received regulatory approval to buy 60% of the bank’s equity. The outlook remains positive. The sellers are a consortium of foreign investors led by Advent International, according the ratings agency. The remaining 40% stake, which takes the form of non-voting preferred stock, is held by the Uruguayan government. NBC is the country’s fourth-largest private sector bank, says Fitch.
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StanChart Names Global Markets Head
Saranya Skontanarak has been appointed as Standard Chartered’s head of global markets for Brazil after holding a similar position in Vietnam. She will report to Mohammed Grimeh, head of global markets for the Americas. Skontanarak joined Standard Chartered in 1988 and has held a variety of roles at the bank mostly in Asia. In Brazil, her mandate is to build client relationships, leveraging the banks existing footprints in Asia, Africa and the Middle East.
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Newland Drops to B3
Moody’s has lowered the rating of Newland International to B3 from B2. The developer of the Trump Ocean Club in Panama should see client defaults above 30% upon completion of construction deliveries in the 3Q11, the agency says. Subcontractor delays have also pushed up costs by 8% or $19.6m. The outlook is negative. The project has seen a series of downgrades since issuing $220m in 2014 bonds in 2007, due to construction difficulties and volatility in the global real estate markets. Last year, a majority of bond holders consented to a series of amendments to the bonds’ indentures.
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Pacific Rubiales Gets Upgrade
S&P has raised Pacific Rubiales’ rating to BB from BB minus. The LatAm-focused oil company has continually improved its operational and financial development, exceeding expectations, the agency says. Production from fields in Colombia and the start of operations in Peru and Guatemala have helped revenue for the 12 months ending March 31, doubling to reach $1.9bn. The outlook is stable.
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Bulltick Co-Founder Launches Fund
Luis Alberto Guerra, co-founder of financial services firm Bulltick, is launching a new LatAm fund to invest in the environmental and financial sectors throughout the region. The new fund, Miami-based Capital-Element, will focus on introducing service concepts and green technology in unexploited LatAm environmental sectors in addition to seeking niche market opportunities in financial services. Guerra was co-founder of Bulltick Capital Markets, a LatAm financial services firm and Grupo Mex Ambiental, an industrial waste collection, treatment and recycling company.
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Inflation, Politics Reduces LatAm’s Allure
LatAm continues to look attractive to investors and analysts thanks to solid fundamentals and relatively alluring valuations, but inflation, and more recently political concerns, are increasingly weighing on sentiment. Despite domestic demand fuelling growth and investment opportunities in Brazil and other markets, the region is still exposed to the ups and downs of the commodity cycle. “The commodity cycle continues to be good, but at the end of it there are sizeable risks,” says James Donald, portfolio manager at Lazard Asset Management. China should be able to continue to manufacture growth for at least 6-7 years more, but LatAm only sees a favorable position in the world economy like this once every 30 years or so, he adds. At the moment equities offer reasonable value versus other regions, with the selloffs this year creating some opportunities in individual stocks. Concerns that LatAm governments may fail to take full advantage of such opportunities were echoed elsewhere among attendees at LatinFinance’s Latin America Europe Investor’s Forum in Zurich. Marcelo, head of LatAm research at BNP Paribas, agrees that the region is enjoying favorable tailwinds, but “the main risk is complacency, with governments failing to advance structural reforms.” Political risks are also coming to the fore after leftist candidate Ollanta Humala won the presidential elections earlier this year in Peru. “We’ve stopped doing anything in Peru for the time being. It was once one of our highest ranked countries to invest in,” says Urs Wietlisbach, executive vice chairman at private equity investor Partners Group. Other investors echo this cautious stance toward one of the fastest growing economies in the region. “Maybe Humala is another Lula, we’ll see about that. The market corrected a lot, but the fundamentals are strong, and whoever is in charge will have to do a lot to change that,” notes Thomas Fallon, head of EM at French asset manager UFG-LFP.
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LatAm Corporates Seek Regional Expansion
LatAm corporates are expected to continue geographic diversification on the back of continued regional economic growth, currency appreciation, and domestic market share saturation, according to Moody’s. As domestic markets approach saturation, companies are looking abroad for new growth opportunities to increase revenues. Neighboring markets with similar language, demographics and culture will allow companies to leverage familiar brands, marketing capabilities and distribution techniques, according to Moody’s.
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LatAm Telecos Lag Other Sectors
LatAm telecom companies performed poorly this year on a series of metrics measuring social responsibility, corporate governance and overall sustainability, according to a study by LatinFinance in association with consultancy Management & Excellence (M&E). “Performance scores among telecoms this year ranged from 16%-33%, all very weak scores,” says William Cox, MD at M&E. “Telecoms have not yet discovered sustainability as a mechanism for driving investor interest, employee productivity or sales,” Cox says. Telecom companies had performed better in previous years when they were only asked to identify which aspects of corporate sustainability they were seeking to address. This time they were also evaluated on how much progress they were making toward their goals and on specific data points such as percentage of emissions reductions and earnings per share. By these metrics, telecom lags other sectors M&E tracks, such as mining and energy. Despite the general poor performance for the sector, there were bright spots. Telemar Oi, the Brazilian operator of the Oi telecom brand, actually improved its compliance ranking between 2009 and 2011 to 59% from 55%. Increased transparency, improvements in corporate governance and overall management quality as well as consideration of a greater number of risk areas drove the improved rating. Telefonica Colombia, meanwhile, led the sector with a final tally of 65%, bolstered by a score of 75% in compliance but dragged down by low ratings for performance (33%) and risk (23%). While such percentages are enough to put it well ahead of other leading telecoms in the region like Oi (53%), Vivo (47%) and Telmex (45%), it remains significantly below scores for companies in other sectors. “Telefonica Colombia excelled with consistent improvements in financial data and improving employee satisfaction results,” Cox says. “But a final score of 65% is not good.”