Category: Caribbean

Canada’s CIBC has acquired a majority stake in FirstCaribbean International Bank after buying the 43.7% share owned by Barclay’s Bank. CIBC paid $988.6 million in cash, or $1.62 per share. The Canadian bank said it will now push forward with its planned mandatory offer to all shareholders in FirstCaribbean at the same price of $1.62 per share plus accrued but unpaid dividends. CIBC’s agreement with Barclays allows the UK bank the option to tender all or a portion of its remaining FirstCaribbean shares under that offer. FirstCaribbean was formed in 2002 when CIBC merged its Caribbean operations with those of Barclays’. It is now the largest regionally listed bank in the English-speaking Caribbean with assets of around $12.4 billion, according to CIBC.

Belize offered to swap its outstanding commercial foreign debt for new dollar bonds, Monday, following approval of the plan last week from the country’s National Assembly. The new bonds mature in 2029, with principal payments starting in 2019. The bonds will bear interest in the first three years after issuance at a fixed per annum rate of 4.25%. In years four to five, the rate will step up to 6.00%, and thereafter through the maturity of the bonds the interest rate will level off at 8.50% per annum. All coupons are to be paid in cash on their respective due dates. According to Belize’s prime minister, Said Musa, the debt swap will save the country $301 million over the next five years in interest payments. Earlier this month, ratings agency Standard & Poor’s lowered Belize’s long-term foreign currency sovereign credit rating to selective default (SD) from CC/C on news of the debt swap.

Central American and Caribbean sovereign debt returned 1.53% in November, giving the region a 10.85% gain year-to-date, according to Bear Stearns. Belize, Bahamas, and Grenada outperformed in very thin trade, while Panama and El Salvador also did well. Bear Stearns has upgraded El Salvador to marketperform in its portfolio and keeps Panama at marketperform, both due to valuation considerations. It also cut Trinidad and Tobago to marketperform from outperform, following strong gains and based on expectations of more sovereign supply. “Domestic interest rates are due to rise further, potentially decreasing the attractiveness of the U.S. dollar external debt, at least on the margin,” said Bear, of T&T. In general, the shop views the region’s fundamentals as quite solid.

Venezuela’s state-owned oil company PDVSA has reportedly offered $1.5 billion for a 49% stake in an oil refinery in the Caribbean island of Curaçao, part of the Netherlands Antilles. PDVSA currently leases the Isla refinery from the government and has a contract to do so until 2019. The refinery processes 320,000 barrels of oil per day but large investments are needed to ensure the facility remains profitable and to keep it up to date with environmental requirements.

The International Finance Corporation (IFC), the private sector arm of the World Bank Group, announced that Latin America and the Caribbean region represented the largest recipient of IFC financing during fiscal 2006, receiving $2.6 billion in total. The IFC has invested $31 billion in the region in the past 50 years, according to the organization. In fiscal year 2006, the Corporation committed $1.75 billion to 69 private sector projects, as well as $888 million from commercial banks through syndicated loans, for a total of $2.6 billion. This financing was broadly distributed throughout the region, with the largest support for companies in Brazil, Mexico, Argentina, Colombia, the Caribbean, Central America, and Peru, across such sectors as infrastructure, housing, microfinance, agribusiness, and oil and gas.

Belize is to restructure its foreign debt and will likely swap its existing bonds and commercial loans for a single, amortizing bond by the end of this year. Currently, the country has six outstanding international bonds totaling $338 million, with most held by a group of no more than 30 creditors. It also owes $253 million in commercial loans. Of Belize’s total $1.1 billion debt burden, only $116 million is accounted for by domestic debt. Multilateral and bilateral loans account for $371 million. Last month ratings agency Standard & Poor’s downgraded Belize foreign currency credit rating from CCC- to CC, just two notches above a default rating.

The International Finance Corporation (IFC), the private-sector arm of the World Bank, has extended its Global Trade Finance Program to the Caribbean. It announced that Banco Multiple Leon, the third-largest private commercial bank in the Dominican Republic, has become the first issuing bank to join the Program in the region. Through the program, the IFC “provides guarantee coverage of bank risk in emerging markets, allowing recipients to expand their trade finance transactions within an extensive network of countries and banks and to enhance their trade finance coverage”.

Venezuela is to increase the amount of oil it supplies at preferential rates to Jamaica by around 12%. It will now supply 23,500 barrels of crude per day as part of its regional energy plan agreed under the Petrocaribe agreement. Venezuela’s president, Hugo Chávez, visited Jamaica earlier this week to discuss the increase in supply. Venezuela is also working with Jamaican state-run oil company Petrojam to increase the production capacity at a local refinery from 36,000 barrels of oil per day up to 50,000 bpd.

Proximity to the US and a bevy of English speakers are helping the Caribbean lure a growing slice of the global call-center business.