Brazilian officials decided unanimously to raise the country’s benchmark interest rate 50bp to 10.00%, while Colombian officials were also unanimous in a vote to hold theirs at 3.25%. Brazil’s move was expected, with analysts expecting a slowing at the next meeting in January. Several shops noted a change in the bank’s message, which had been consistent through the previous meetings. “With today’s policy statement changes, the Copom left the door open to taper the pace of rate hikes from 50bp to 25bp, but the statement falls short of indicating whether the central bank is planning, or under what conditions, it plans to decelerate the pace of rate hikes,” Goldman Sachs says. The shop sees a 25bp hike in January, noting that the move will depend on data including inflation and the fx rate. “The Copom changed the text to signal, in our view, that the end of the tightening cycle is near,” says Itau, another calling for a 25p hike in January.
Category: Regions
Cultiba Completes Local Debt
Mexico’s Cultiba has raised MXP1.2bn ($92m) in its domestic bond market debut, according to regulatory filings. The beverage company’s 2018 pays TIIE+89bp. It is raising funds for general corporate purposes. Banorte-Ixe, Inbursa, and Santander managed the transaction, rated AA/AA minus on a national scale. The Pepsi bottler formerly known as Embotelladoras Unidas raised MXP3.94bn ($310m) in an equity follow-on in January that largely served as a re-IPO.
DF Prices Domestic ABS
The government of Mexico’s Distrito Federal has issued MXP2.13bn ($162m) in domestic bonds, according to regulatory documents. The 10-year fixed-rate notes pay 7.05%, and are backed by future revenues passed down from Mexico’s federal government. The capital city’s government is raising money to fund infrastructure projects and to repay debt, and had been targeting up to MXP3bn. Santander managed the transaction, rated AAA on a national scale. In November of last year, DF sold MXP2.5bn in 15-year bonds at 6.85%, or Mbonos+85bp. Coming up this week, Fibra Uno will look to raise MXP13bn-MXP18bn in the first bond sale from a Fibra real estate fund. The transaction was postponed from last week. In an other deal moved to this week from last, Banco Interacciones is targeting MXP1bn Wednesday.
Lala Leader Resigns
Alejandro Rodriguez has resigned as CEO of Mexico’s Grupo Lala, the dairy products maker says, citing personal reasons. Board member Arquimedes Celes takes his place. Celes was CEO from 2001-2012.
Navistar Reopens MXP Bonds
Mexico’s Navistar has reopened its 2018 domestic floating-rate notes, adding MXP800mn ($61m), according to a regulatory filing. After receiving slightly more than MXP800m demand, the Mexican unit of the US vehicle manufacturer reopened the bond to match the original rate of TIIE+150bp. Proceeds will be used for general corporate purposes. The total size is now MXP1.8bn. Actinver managed the transaction, rated AAA on a national scale.
Bahamas to Meet Buyside
The Bahamas plans to start fixed-income investor meetings today, according to people familiar with the matter. The sovereign is visiting accounts in London, Boston and New York before finishing in Los Angeles Friday. JPMorgan and RBC are managing. A3/A minus Bahamas last sold $300m in new 2029 bonds at a yield of 7.0% in 2009. The sale through RBC and First Caribbean drew nearly $400m in orders and was upsized from $250m. The 2029 bonds were seen trading to yield 5.75% last week.
Miner Readies Takeout
Peruvian miner Hochschild Mining is preparing an international debt issuance to replace acquisition debt, what would be its debut bond. The plan is for $350m in 2020 and 2023 notes issued through the Compania Minera Ares subsidiary and guaranteed by Hochschild and its main subsidiaries, according to ratings reports. A roadshow was scheduled to begin November 28 and visit Lima, Santiago, Los Angeles, London, New York, Zurich, Geneva, Boston and New York through Wednesday, according to people familiar with the matter. BBVA, Bank of America Merrill Lynch and Goldman Sachs are managing the transaction, rated Ba1/BB+. Hochschild closed October 1 a $340m bridge loan with that group of banks with pricing at Libor+350bp. Hochschild is in the process of acquiring International Minerals, owner of 40% of the Pallancata mine and Inmaculada advanced project in Peru, for $298m, with funding coming through the 1-year loan and a $73m equity placement done earlier this month. The target’s shareholders were to vote on the deal by December.
Mexican Senate approves financial reform
Part of Peña Nieto’s reform package, the bank bill changes the bankruptcy code – but analysts are uncertain of the long-term impact
S&P Negative on Microfinancier
S&P has changed the outlook on the BBB rating of Peru’s MiBanco to negative, it says, due to weakening asset quality metrics. A deterioration in borrowers’ debt-payment capacity in the last several quarters is pressuring the Peruvian microfinance bank’s bottom-line results through higher provisions and pressuring its risk position.
Colombia Ponders GDN
Colombia is considering issuing its first global depository note to draw international investors into its local debt market, Michel Janna, Colombia’s head of public credit, tells LatinFinance. The government is advancing plans to curtail issuance of COP-denominated Treasury (TES) bonds next year by at least COP2trn ($1.04bn), opening up space for a GDN, pending an appropriate structure for dealing with the country’s 14% withholding tax. “There are a couple of banks with the idea of launching GDNs for Colombia. We encourage this: if it’s done in the proper way, there will be an advantage for the local market. It simplifies the procedure for investors to tap the local market,” Janna says. The sovereign will consider issuing hard currency debt in the new year, though timing will depend on an increase in US Treasury yields “by up to 50 basis points in the next two to three quarters” and Colombia’s presidential elections in May, he says. Further diversification of Colombia’s funding currencies is desirable, but not imminent. “It’s a possibility that we could go for euro or yen transactions at some point, but not in the immediate future,” he says. The government is establishing a centralized treasury, where public entities with high cash balances – including the airports agency, the oil agency and the telecoms fund – will be required to deposit their excess cash, instead of in TES, as has been the norm. The result will be a decline in TES issuance by public entities of at least 2 trillion pesos in 2014 and 6 trillion pesos thereafter, though the scheme, which will be fully implemented y 2015, will not impact the TES primary market.