Category: Equity

Stable food prices helped to keep Brazil’s inflation down to 0.25% in April, according to the national statistics agency IBGE. Inflation, as measured by IPCA, slowed from 0.37% in March helped by a marginal 0.03% price rise in foodstuffs. Annual inflation, meanwhile, rose from 2.96% to 3.0%, while cumulatively prices rose by 1.51%.

Peruvian mining company Volcan is preparing to list its stock on the Santiago and London Stock Exchanges, the company announced. Volcan will be the first Peruvian firm to list in Chile and the second to list in London. The zinc miner will join Spain’s Endesa, Canada’s Aur Resources and Methanex on the so-called “offshore market.” Last year, silver mining company Hochschild Mining opted to float its stock on the London exchange.

Brazilian Banco Daycoval will join two other mid-sized banks to list on Bovespa this year – Sofisa and Pine – after it filed with the securities commission, CVM, to launch an IPO of preferred shares later this year. UBS will coordinate the offering. The São Paulo-based bank booked revenues of $218m in 2006, a 60% rise over 2005 sales. Other mid-tiered banks in the pipeline include Banco Cruzeiro do Sul, Banco Bonsucesso, and Paraná Banco.

Brazilian companies are lining up to issue IPOs on Bovespa. In filings with the local securities commission, the CVM, on Tuesday, credit-card services provider Redecard, clothing company Hering and logistic company Tegman all said they were planning an initial public offering of shares on Bovespa. Redecard is owned by Itaú and Unibanco, as well as Citi. Banco Itaú will coordinate the Redecard issue and will also be handling the offering being planned by Hering. Meantime, JP Morgan will coordinate the IPO being lined up by Tegma Gestao Logistica.

Brazil’s Banco Industrial e Comercial (BICBanco) is planning to float its stock on Bovespa, the company said in a filing with the securities commission, CVM. UBS is coordinating the offering. The Bank, which specializes in trade finance, was the country’s first bank to join the IFC’s Trade Finance Facilitation Program (TFFP) as an issuing bank, last February. It is the ninth-largest private bank, serving medium-sized companies.

Brazil is Citi’s top equity pick in Latin America. “We raise our year-end Bovespa target to 54,000, based on improving fundamentals, not valuations,” says the shop. It closed Monday at 48,961. Citi also predicts that the Selic will fall to 10.75% by year-end and cut its 2007 inflation forecast to 3.4%. “Macro growth prospects are rising, with the risk of positive earnings surprises; this warrants a modest re-rating of the market,” says Citi. The shop adds that the positive outlook is not affected the $12.5bn of supply in the past year from 44 deals, including secondaries. “The new estimated free float is 2.8% of market cap and only 7.1 days of trading. Excluding real estate/construction, the only sector where we see indigestion, new issues have risen 34% on average and have outperformed the Bovespa by 5%,” says Citi. It remains overweight defensive Chile, and underweight Mexico.

Mexico has jacked up rates 25bp in what the Central Bank presented as a bid to stem inflation. Stocks and bonds dropped in reaction to the surprise hike to 7.25%. Analysts had not expected the move since inflation seemed to be already under wraps. Another rise is not anticipated. The “corto” was left unchanged at MXP79m.

Argentine electricity distributor Edenor raised $327m in its IPO of 15.2m ADSs and 81.2m Class B shares offered in Argentina. The international tranche priced at $17 a share, the middle of a $16-18 range, and raised $257.8m. The Argentine retail tranche priced at ARP2.62 a share to raise $69.1m, according to Dealogic. US institutions bought the bulk of the international offering, with one of the underwriters claiming institutional demand for the ADSs driving an oversubscription of four times. Edenor’s ADS had risen more than 5% by mid-afternoon Thursday. Edenor has 30 days to exercise a 15% over-allotment option. Citi and JPMorgan led the international piece and Raymond James Argentina handled sales locally.

Brazilian real estate and property development company AGRA Empreendimentos Imobiliarios raised $344m yesterday, Wednesday, after floating its stock on Bovespa. Shares in the IPO priced at 8.50 reais ($4.19), mid-way between initial guidance of 7 to 10 reais. Settlement is April 30. Credit Suisse was the sole bookrunner.