Mexico’s GMAC Financiera is planning to launch an MBS issue in the next two weeks, CEO Mauricio Jannet tells LatinFinance. The details are still being finalized, but the target is MXP620m at a tenor of about 7-8 years. The official says GMAC will follow the Danish model first used in the Mexican market by Hipotecaria Total in its Bonhito program, which allows for the issuance of bonds as the mortgage credits are accumulated, rather than waiting to build a large pool of collateral before issuing. This is the only safe way to do asset-backed issuance in Mexico at the moment to the institutional investor community, Jannet says. “You have to do your homework,” he explains, noting issuers must today provide more in the line of data points and evidence for how the model has worked historically than they have in the past.
Category: People
Medina-Mora Steady in Citi Shuffle
Manuel Medina-Mora keeps his role as LatAm head and former regional DCM head Mike Corbat moves up as part of a Citi reorganization announced Tuesday by CEO Vikram Pandit. Citi was split into two parts in a bid to salvage the strongest elements of the franchise. Citicorp includes assets that the bank wants to keep. This includes LatAm, Asia, EMEA and North America, as well as global transaction services, the corporate and investment bank and the private bank. Citi Holdings – what analysts are calling “the bad bank” – includes brokerage and asset management, local consumer finance, and the special asset pool, all units that Citi is looking to divest. It will be run on an interim basis by Corbat. The former global head of commercial and corporate banking worked his way up from head of LatAm DCM at the start of the decade, through leadership of Citi’s EM platform. Citi says it is not looking to sell any part of the LatAm franchise, least of all its lucrative Banamex unit. However, bankers at other shops say Mexican financiers are mulling a bid, and that Citi would be forced to sell if its financial situation deteriorates, or if it is bought by the US government. Citicorp has 6% of its assets and 9% of its average loans in LatAm. The Citi reorg unveiled this week is an attempt to stop the rot and return the beleaguered shop to profitability. The bank’s stock jumped on news of the global revamp and closed 6.6% higher at $3.55 Tuesday. (For an exclusive interview with Manuel Medina-Mora, including comment on the future of Citi-Banamex, see www.latinfinance.com)
BofA-Merrill Shakeup Dents LatAm
Amid turnover in the global C-suite – including the exit of former CEO John Thain – senior LatAm staff are departing Merrill Lynch, which reported a Q4 loss of $15.31bn. Bankers at other shops expect further regional reductions as Bank of America pushes to cut costs and realize value from the Merrill purchase. Two senior LatAm equities bankers have recently left as part of a company-wide reduction in headcount. The departures are billed by some as resignations, though Merrill is rumored to be seeking to cut thousands of jobs globally. Juan Vogeler, MD and co-head of LatAm ECM based in New York, has gone. Ricardo Lanfranchi, MD in charge of Merrill’s Brazil-based equities brokerage unit, has also departed, along with at least 6 other mid and junior level investment bankers in Sao Paulo. The changes appear to leave Sebastien Chatel, co-head of ECM based in Sao Paulo, as the sole remaining senior executive overseeing the equity product for LatAm. The MD was confirmed last week to still be employed at Merrill. Three more rounds of layoffs are expected at BofA-Merrill globally, the next in February. “It’s in total disarray, all over the place,” says a LatAm banker at the recently merged entity, when asked about the mood internally. A Merrill spokeswoman declines to comment. Merrill has made a decent 2009 start on the fixed income side in LatAm, with a joint bookrunner title on Brazil’s comeback $1bn 2019 earlier this month. However, the bond traded poorly and was criticized by investors and bankers at rival shops for its execution. The shop also advised on Invest Tur’s merger with LAHotels.
Santander Said Maintaining Brazil Investments
Banco Santander’s CEO Emilio Botin says his bank will proceed with plans to invest little over $1bn through 2011 to expand in Brazil, according to wire reports that cite a company statement. The announcement comes a few days after Santander slashed 400 jobs in the country, according to media reports. Bank officials were not immediately available for comment.
Bradesco Taps Insurance Chief for CEO
Bradesco chairman Lazaro de Mello Brandao has picked Luiz Carlos Trabuco Cappi to be the bank’s next CEO. The appointment of Trabuco, who is head of the bank’s insurance business, is no big surprise and seems to have been received reasonably well by the market. Trabuco, EVP and head of Bradesco BBI Jose Luiz Acar Pedro, and Milton Vargas, EVP and IR chief, were among the names cited as the viable candidates, say market watchers. “I think Acar would have added more dynamism to the bank’s leadership,” says a Sao Paulo-based analyst at a local shop, adding Trabuco is a more obvious choice given his longer career at Bradesco. “Given Mr. Trabuco’s experience as the president of Bradesco Seguros, we believe the board is implicitly stressing the group’s commitment to the bancassurance model,” notes Goldman in a report. Bradesco faces an uphill battle to win back market share following a flurry of bank mergers among competitors pushed it into third place by assets. Goldman notes Bradesco has a good opportunity to expand organically while its competition focuses on integrating newly acquired units. Bradesco’s bylaws state its chief executive can be no older than 65 years and Marcio Cypriano, CEO, commemorated his 65th birthday at the end of 2008. The decision will be voted on at Bradesco’s next board meeting on March 10 and is expected to be approved.
Secondary PE Player Eyes Regional Spree
Secondary private equity firm Paul Capital predicts continued growth in LatAm private equity, despite the global financial markets slump. “People are beginning to realize perhaps that maybe too much capital went to Asia,” says David de Weese, partner for secondary investments at Paul Capital. “The emerging markets have some other interesting plays besides India and China, so I think you’re going to see more capital coming into Latin America,” he tells LatinFinance in a recent interview. Paul Capital, which globally manages more than $6.6bn, announced earlier this year that it had expanded its EM presence by opening offices in Hong Kong and Sao Paulo. “We like a lot of geographic diversification as well as industry diversification,” says de Weese. “We do like the [LatAm] region . . . markets that are not well served sometimes provide a lot of upside,” he adds. “Volumes have been increasing significantly since 2002,” says Duncan Littlejohn, MD for secondary investments and head of Paul Capital’s Sao Paulo office. “There’s a critical mass building up and that’s the basis of our business,” he adds. “Opportunities going forward have never been better for Latin America on a primary basis,” says Littlejohn. “You have several factors playing in its favor,” he adds, listing them recent fundraising, more attractive valuations for buyers, an absence of M&A financing, debt refinancing needs and the death of IPOs. “There’s a fair amount of dry powder in the hands of a half dozen private equity funds and that’s a pretty good position to start from,” says Littlejohn. He adds that the larger funds are mostly US-based, along with some large players in Brazil, including BNDES. “We’re also seeing some European pension funds now coming, especially to Brazil, in terms of making commitments to funds,” says de Weese. Paul Capital has roughly $200m invested in LatAm. Most of its activity is in Brazil, Chile, Argentina, Mexico, Colombia, with Peru starting to see interest.
Citi’s Boord Returns to Region
Veteran investment banker John Boord is returning to Citi’s LatAm unit where he will co-head regional investment banking starting January, Manuel Medina-Mora, chairman and CEO Citigroup Latin America and Mexico tells LatinFinance. The Venezuelan national will run LatAm investment banking ex-Brazil and be based in Mexico. Boord, a former head of Mexican and regional investment banking at the firm, replaces Carlos Vara who left Citi in early December. Boord is currently in Citi’s New York-based US consumer and retail investment banking group. He wanted to return to the region, Medina Mora adds. The investment banking business that Vara helped run covers advisory, M&A and equity. Ricardo Lacerda, Vara’s former co-head based in Sao Paulo, will continue to lead Citi’s Brazil investment banking efforts. Separately, former LatAm DCM co-head John Hartzell left the firm in a pre-Thanksgiving round of redundancies. Hartzell departed the DCM group in early 2007 to head LatAm trading and was latterly involved in finding derivatives solutions for corporate clients.
EEB Turns to Locals for Financing
Colombian energy company EEB is in talks to raise $400m in new debt in the local bank market. Astrid Martinez, CEO, says she is discussing with a group of banks raising a 3-year bullet bridge loan at an expected rate of DTF plus 450bp-500bp. She notes that the price will likely be some 50bp higher than what might have been achieved prior to September. In the next 2 years, the company will seek a longer-term takeout, likely with international banks. The new debt will finance 2 large gas pipeline projects in Colombia which require total investment of $600m. The remaining $200m for capex will come from EEB’s own coffers. The new debt will elevate the company’s leverage ratio to 3.12x from 2.28x, says Martinez, keeping the company comfortably within leverage limits. Bond covenants say leverage must remain below 4.50x. EEB had originally sought to raise $400m via an equity issue or the sale of a stake to a strategic partner, but those plans gave way to raising debt in the local market. TGI, the company’s subsidiary gas unit, does not have the capacity to raise more debt, says Martinez. EEB’s debt is comprised primarily of $750m in 2017 9.50% notes (TGI), and $610m in 2014 NC4 8.75% bonds, both issued in the second half of 2007. On Monday, Fitch reduced its outlook on the company’s BB rated debt to negative from stable.
Consolidation Calling
Brazil’s larger telecom players will have continued opportunity to acquire smaller assets, says Luiz Eduardo Falco, CEO of Telemar, also known as Oi. In mid-November, the company neared approval for its 13 billion reais purchase of Brasil Telecom.
Vitro Appoints Finance Head
Mexico’s Vitro has named a new CFO and other members to its management team, it says, in the wake of naming Hugo Lara as CEO last week. Claudio Del Valle has been appointed director of the now-merged areas of finance and administration. Del Valle’s appointment follows the recent resignation of Enrique Osorio as CFO. Roberto Rubio, formerly president of diverse industries and technology, assumes Lara’s old post of president of flat glassware. The struggling glassmaker recently secured $100m through a structured transaction from Bancomext, allowing it to continue operating normally. It is in negotiations with derivative counterparties, and has contracted the Blackstone Group to advise it. Vitro’s liquidity was pinched by a $230m loss in derivative contracts. Federico Sada resigned as CEO in early November after 34 years at the glassmaker, and will stay on as a board member.