Market participants expect the pricing of the America Movil $4bn syndicated loan to be tighter than the Vale loan. Banks that pitched for Vale and did not win are expected to bid aggressively for the America Movil mandate. “The market is very liquid and there is still a lack of assets,” says one syndicated loans banker. Another says that since Vale’s $3bn, 5-year syndicated loan is offering a spread of 65bp over Libor, pricing for the portion of the America Movil loan with a 5-year tenor could come between 50bp and 60bp over Libor, as it has a higher credit rating than Vale. America Movil’s credit rating is A minus and Vale’s is BBB+. America Movil is looking at proposals for a 3-year and a 5-year tenor for a revolver, either in USD or a combination of USD and EUR. It is expected to choose banks this month, with a transaction expected to be signed by April.
Category: Economy & Policy
CentAm, DomRep to Get $2bn from IDB
The IDB says it expects to disburse $2bn in financing for Central America and the Dominican Republic this year to invest in citizen security, infrastructure, social protection networks, natural disasters and climate change and public finances. This is slightly below the amount disbursed in 2010, which totaled $2.1bn, but is a 30% increase from 2009.
Mexico Seen Keeping Rate Unchanged
Mexico’s central bank is expected to keep its rate unchanged at 4.50% today. “While the central bank may warn of rising food-related risks to inflation – partly related to the damaged crops caused by freezing weather in early February – the overall tone of [its] statement should continue to show a central bank that is in no hurry to hike,” Morgan Stanley says. The firm believes the rate will stay at 4.50% for the rest of the year. Nomura agrees, saying that “with inflation within the target band of 2%-4% and the output gap expected to be barely positive in H2 2011, we believe Banxico will keep the policy rate unchanged this year.”
Argentina Borrows from State-Run Bank
Argentina will borrow ARP8.4bn ($2bn) from state-run Banco de la Nacion Argentina. According to the Argentine government, the loan will pay a rate of 100bp over Badlar and amortize over 2 years beginning in January 2012.
Brazil Hikes Rate As Expected
Brazil’s central bank tightened its rate by 50bp as expected, bringing it to 11.75%. “We expect another 100bps in rate tightening through year-end, taking the rate to 12.75% by end-2011,” says Bulltick. Morgan Stanley thinks the rate will end the year at 12.50%.
DomRep Hikes Rate, Replaces FinMin
The Dominican Republic’s central bank tightened its rate by 100bp, bringing it to 6.0%, its highest level since February 2009. The central bank cites headline inflation, which at 6.2% in January is running above the bank’s 5-6% target for this year. “We believe the pace of future rate hikes will likely decline as annual inflation falls within the official target range,” says JPMorgan. Nomura says this is a good policy move to control aggregate demand, which is growing at a fast pace. Meanwhile, the country’s finance minister, Vicente Bengoa, has been replaced with Daniel Toribio, the general manager of state-owned Banco de Reservas and minister of finance for the first term of president Leonel Fernandez. “We view this change positively, as this is likely to result in increased coordination within the economic cabinet and improved policymaking,” says Nomura analyst Boris Segura. “The departing minister of finance had a difficult working relationship inside President Fernandez’s economic team,” Segura says. “Also, Bengoa explicitly rejected approaching the IMF until Fernandez made the decision to engage it in Q3 2009,” he adds. Bengoa had been finance minister since 2004.
Interacciones Prices Wide
Mexico’s Banco Interacciones priced MXP2bn in 2014 bonds at 115bp over TIIE, after the bank said it had been looking to issue in the 100bp over TIIE area. While the bank issued the full amount it had been looking to place, the deal was not oversubscribed. The pricing was 10bp tighter than the MXP1.5bn in 3-year bonds it issued in December, at 125bp over TIIE. Private banks and treasuries bought the deal that was self-led together with HSBC. Proceeds will be used to increase lending, especially for local government infrastructure projects.
Credit Agricole to Issue in MXP
Credit Agricole will issue up to MXP2bn in 3-year bonds in either the second or third week of March, according to a lead banker. The bonds will pay a spread over TIIE, with the guidance yet to be determined, and are rated AA on a national scale. Banorte and Ixe are joint leads. The use of proceeds is for general corporate purposes including expanding its business in Mexico, adds the banker.
Interacciones Coming Tight Say Afores
Mexican pension funds say price guidance for Banco Interacciones’ 3-year bonds, of which they will issue up to MXP2bn today, is too tight. Price guidance is in the 100bp over TIIE area. “If you look at the bank’s capital ratios, they are not great, so for that price I would not take on that risk,” says one head of asset manager at a Mexican pension fund. Another asset manager at a pension fund says the spread would have to be double for the price to be attractive enough for it to participate in the bond issuance. The pricing had been expected last week but the issue was delayed in order to include Grupo Interacciones’ 2010 financial results, according to Fernando Perez Saldivar, director of treasury and wholesale banking at Interacciones. The deal is self-led together with HSBC. The proceeds will be used to increase lending, especially for local government infrastructure projects.
Brazil Expected to Tighten Rate
Brazil’s central bank is expected by the market to hike its rate, known as Selic, by 50bp to 11.75% today. Bulltick agrees with market consensus and expects year-end Selic rate to end at 12.75%. Morgan Stanley also agrees there will be a 50bp hike, but thinks the rate will end the year at 12.50%.