Faced with an over-valued real the Brazilian government is relying on a wider set of ‘macro-prudential’ measures to fight inflation.
Category: Economy & Policy
Posted inMagazine
Tilting at Windmills
Mexico’s wind energy market is potentially lucrative. But a lack of government commitment and insufficient transmission capacity could stall its development.
Posted inMagazine
Back to the Future
The potential for a repeat of North America’s tech boom has some investors salivating, but a lack of exit opportunities remains an obstacle.
Posted inMagazine
Game Changer
Venezuelan president Hugo Chavez’s admission in July that he was battling cancer will have a significant impact not only on the country, but accounts with exposure to the credit. As […]
Posted inDaily Brief
NR Finance to Price MXP Bond
Mexico’s NR Finance plans to price MXP3bn ($250m) in 3-year floating rate bonds this week, according to bankers on the deal. Pricing is heard around TIIE+45bp, though official guidance is not expected until mid-week. Scotia Capital and HSBC are managing the deal, which carries a local AA+ rating. This comes after the Nissan leasing subsidiary hit the road last week. The issuer last came to market in November 2010, when it issued MXP2.8bn in 3-year bonds, priced at 65bp over TIIE. Proceeds will be used to refinance debt, bankers say.
Posted inDaily Brief
Uruguay Hikes Benchmark Rate
Uruguay’s central bank raised its rate 50bp to 8.0% from 7.5%, in-line with market consensus. RBS had said a neutral rate is around 8.5%, assuming 7.0% inflation and a 1.5% real interest rate. BAML expected a hike as the central bank seeks to keep inflation from reaching double digits.
Posted inDaily Brief
Gruma Concludes Refinancing
Mexico’s Gruma announced the conclusion of a debt refinancing Wednesday with the prepayment of an MXP3.367bn Bancomext loan that had cost it TIIE+6.21%. The idea was to extend tenors and lower financing costs, the company says. The wheat and corn producer refinanced the loan through three new facilities tied to a leverage grid. These include a 7-year, MXP1.2bn syndicated bank loan via BBVA Bancomer that pays TIIE+137.5bp-225bp, a 5-year $50m revolving credit facility through Rabobank paying Libor+150bp-225bp, and a new MXP600m 7-year loan from Bancomext paying TIIE+137.5bp-225bp. The company also announced it has refinanced a $200m revolving line of credit with BAML paying a floating rate of Libor+137.5bp-200bp. The transaction will save the company $72m.
Posted inDaily Brief
Chile CenBank Raises Growth Estimate
Chile’s central bank raised its growth estimate for GDP to 6.0%-7.0% from 5.5%-6.5%, with domestic demand expected to expand 8.5%, up from 7.6%. The revision stems primarily from the economy’s stronger performance in the first quarter. For the rest of the year, the pace of expansion of total activity and demand will moderate as forecast in March, according to the central bank. In particular, the speed of growth in the GDP of sectors other than natural resources will quickly approach the trend rate, which is still estimated at 5%.
Posted inDaily Brief
World Bank Sees GDP Slide in LatAm
The World Bank says it expects GDP in LatAm and the Caribbean to decline to 4.5% in 2011, down from its 3-decade high rate of 6% in 2010. GDP is expected to ease in 2011 before slowing toward 4% by 2013, a rate that is consistent with underlying potential. Peru is expected to lead the region with 7% growth this year before sliding to 5.2% in 2013. Colombia is expected to grow 4.7%. Strong growth in developing economies has contributed to a new set of global challenges, including higher commodity prices, rising inflation, and the possible return of destabilizing capital inflows as monetary policy tightens and interest rates rise.
Posted inDaily Brief
Colombia Likely to Raise Rate
Colombia’s central bank is likely to raise its rate 25bp to 4.25% today, according to market consensus. Goldman Sachs says there is a small probability of a pause, which is being urged by President Santos. “We feel that continuing to normalize policy would reinforce the independence and inflation-fighting credentials of the central bank,” Goldman says. Morgan Stanley expects rates to reach 4.50% by year-end and says the Colombian economy remains in balanced expansion at 4%-4.5% growth with inflation pressures contained.