Category: Economy & Policy
Posted inDaily Brief

Mexico Debt Pipeline Refills

by LatinFinance

NR Finance, the Mexican subsidiary of the financing arm of Nissan-Renault, is coming to market November 17 for up to MXP3bn, via Banamex and Scotia. The 3-year bonds pay a spread over TIIE and are rated AA+ on a national scale. The following week, car leasing company Unifin will issue up to MXP400m in 5-year bonds that will pay a spread over TIIE in a deal lead by Ixe. The bonds are rated AAA on a national scale. Proceeds will be used to repay debt and working capital. Scotiabank and Banco Interacciones are also expected to come to the bond market at the end of November, according to regulatory filings. Interacciones is looking to issue up to MXP1.5bn in 3-year bonds by the end of the month. The notes are rated Ba1/A1.mx by Moody’s. Scotia is re-opening a 5-year bond, issued in October for MXP2.312bn 5-year at TIIE+40bp. It is looking to add MXP830m at the same spread to pay for general corporate purposes, says a banker at Scotia. Elsewhere, CFE will issue a dual tranche, 4-year floating and 10-year fixed the week after next. Investors expect the Mexican electricity authority to price at 30bp over TIIE for the 4-year and 120bp-130bp over Mbonos for the fixed tranche.

Posted inDaily Brief

Mexico Rates Seen Steady Until 2012

by LatinFinance

RBC does not expect Banxico to tighten Mexico’s monetary policy rate, currently at 4.50%, until late 2012. “Given uncertainty surrounding whether the large amount of capital flows into EM is temporary or permanent, Banxico is likely to proceed very cautiously in its future decisions and to gauge potential market reactions to these moves,” RBC says. It adds that when Banxico does eventually tighten, it will do so gradually, in 25bp increments. Meanwhile, Morgan Stanley says Banxico could resort to chopping the rate this year. “We suspect that the central bank isn’t ready to ease, though we believe that the next move is more likely to be a rate cut rather than a hike . . . and thus we are removing any tightening from our forecast horizon,” it says.

Posted inDaily Brief

Dilma Win Fails to Stir Brazil Markets

by LatinFinance

With the markets largely having anticipated Dilma Rousseff’s victory, there was limited movement in assets following the Brazilian presidential election Sunday. Brazil’s dollar curve barely moved Monday, say traders, with the 2019 bonds up 0.25 points to 118.85-119.25. The EMBI Brazil index shed 7bp, according to a report from RBC, and the Bovespa gained 1.2%. “Solid gains in congress and among state governorships will ensure Rousseff will have a strong power-base to continue with Lula’s policies, and the expectation is that no material economic policy shift is likely,” RBC says. It expects that whoever is named finance minister will outline some sort of 2011 fiscal adjustment plan to reassure the markets. Likely candidates are Antonio Palocci and Luciano Coutinho, both seen as acceptable by the markets. Rousseff is unlikely to face as favorable external conditions as Lula enjoyed during most of his tenure, RBS notes, while she also lacks Lula’s popularity. Ironically, it says, these factors “could translate into good news, as Rousseff will need to face the challenges to guarantee sustainable growth, which requires a resumption of reforms.”

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