Fitch has upgraded the ratings outlook for BBVA Colombia (BCO) to BBB from BBB minus, on the heels of Colombia’s sovereign rating upgrade. The prospects for corporate Colombia are likely to brighten as consumer confidence fuels credit growth and consumption, the agency says. BCO is expected to continue to grow its loan portfolio across all segments by 15%-20% over the next year or so, Fitch adds.
Category: Corporate & Sovereign Strategy
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Citi Builds LatAm EMCT team
Citigroup has expanded its emerging markets credit team by bringing in several new hires focused on LatAm. Aside from Eric Ollom who left Jefferies in May to join Citi as a credit analyst, the bank has also lured Bevan Rosenbloom from RBS where he also analyzed corporate credits. Both Ollom and Rosenbloom will be responsible for growing Citi’s LatAm credit coverage. On the trading side, Arkady Lefkowitz has also joined the LatAm EMCT team from Santander and will trade LatAm financials and homebuilders. All three will report to Alberto Agrest who head the EMCT team.
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Fitch Upgrades Colombia To BBB-
Fitch upgraded Colombia to BBB- from BB+ Wednesday, providing the sovereign with its third investment grade rating. The agency cited the country’s resilience to external shocks and progress in the government’s reform agenda. The sovereign is currently meeting investors with BAML, Barclays and Citi amid expectations that it could tap the international bond markets.
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Lazard Hires Canas to Lead IB
Lazard has hired Enrique Canas to lead its investment banking business in Colombia, Central America and the Caribbean. Canas joins Lazard from the IFC, where he was regional country manager for Colombia, Peru, Venezuela, Ecuador and Bolivia.
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AmBev, Petrobras Upgraded by Moody’s
AmBev and Petrobras saw their ratings upgraded by Moody’s after Brazil’s foreign currency ceiling was moved to Baa1 from Baa2. The brewer saw its rating upgraded to Baa1 from Baa2, while the oil major’s rating rose to A3 from Baa1.
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SAI Postpones Dollar Bond
Market uncertainty and mixed views on pricing have forced LatAm oil services provider San Antonio Internacional (SAI) to postpone a $500m 7-year NC4 bond, investors say. The issuer met with the buyside last week, aiming for an 11% plus yield, but failed to emerge with a transaction Monday. While some investors blame market factors for the postponement, others say SAI simply represented too much risk to warrant exposure even at low double digits, or a touch higher. “San Antonio is a tough business in a tough market, but there is no difference between 11.5% and 12%. People just didn’t want to buy the bond,” says an investor who declined to participate in the transaction. Investors expressed nervousness about participating against what has been a volatile backdrop and were concerned about secondary performance. “Even if SAI priced well at 11.5% it still would not have performed well under current market conditions,” adds another account following the deal. The fact that SAI leans heavily on cash flows from its Argentine operations was also seen as a negative. Deutsche Bank, HSBC, Itau and Pareto Securities were managing San Antonio’s deal. Ratings were B minus/B3.
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Moody’s Moves Brazil To Baa2
Brazil’s government bonds were upgraded Monday to Baa2 from Baa3 by Moody’s, a move that will help justify already tight spreads on the sovereign. “With two major rating agencies putting Brazil at a mid-BBB level, it will increase EM external debt investors’ comfort level with its tight CDS spread (5yr @ 118bp) and relative level vs. other benchmarks,” RBC notes. The credit rating agency says the sovereign’s credit profile is consistent with ratings in the higher Baa range, along with recent policy adjustments that should result in a more sustainable macroeconomic scenario. The outlook on the rating remains positive. Moody’s last rating action on Brazil was on September 22, 2009 when it upgraded the country’s government bond rating to Baa3 from Ba1, with a positive outlook. In April, Fitch upgraded the sovereign to BBB from BBB minus.
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Vitro Sells Assets of US Subsidiary
Mexico’s Vitro has sold substantially all the assets of US subsidiary Vitro America, along with 3 other US subsidiaries, to American Glass Enterprises, a subsidiary of Sun Capital, for $55m and the assumption of certain liabilities. In April, a Mexican court approved a voluntary prepackaged bankruptcy for the company, which has about $3.4bn in debt. Some creditors had previously rejected restructuring proposals and filed involuntary bankruptcy petitions against the glassmaker. Vitro America had requested a Texas bankruptcy court to allow it to sell all of its assets to Grey Mountain Partners, a US PE firm.
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Colombia Central Bank Raises Rate
Colombia’s central bank raised its rate by 25bp to 4.25%, in-line with consensus expectations. “The accelerating real sector dynamics and still clearly accommodative policy rate (in nominal and real terms) support the central bank’s decision to start in February to preemptively reduce the level of monetary accommodation,” Goldman Sachs says, predicting a 25bp hike.
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La Polar Seeks Covenant Waiver, Share Issue
Chile’s la Polar plans to raise $400m equivalent from the sale of new shares and ask bondholders to waive covenants after loan-loss provision estimates rose to CLP538bn ($1.14bn). The retailer had forecasted earlier this month a loan-loss provision of about CLP200bn after irregularities were detected at its consumer credit business, resulting in the firing and reshuffling of officials. La Polar will ask shareholders for the sale of $400m in new shares in a meeting Wednesday, a capital increase that was originally to go towards expansion plans. It also intends to ask bondholders to waive bond payment acceleration and default covenants in a meeting June 29. La Polar and financial adviser Larrain Vial are also working on a proposal to extend maturities of bank loans.