Peru’s central bank decided to keep the benchmark interest rate at 4.25% when it met Thursday, in line with market expectations. “Inflation is flattening while the economy remains strong. Though external conditions are deteriorating, we don’t think the risks warrant a change in CB policy, for now anyway,” UBS, one of the many banks forecasting a hold, said in a note prior to the decision. Mexico is scheduled to hold its policy meeting, with most anticipating a hold at 4.50%.
Category: Regions
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Ecuador Gets S&P Upgrade
S&P has raised Ecuador’s credit rating to B from B minus, it says, citing the country’s growth prospects and the government’s willingness to pay debt. “The upgrade reflects the perceived improvement in the government’s willingness, as well as capacity, to service its debt due to improved financing options and higher oil production and economic growth prospects,” the agency says. The public sector is able sustain higher levels of investment thanks to higher levels of financing from China combined with the increased oil revenues. The government’s improved relations with private-sector investors, especially in the oil and mining sectors, demonstrate the government’s more pragmatic economic policymaking stance. Real GDP growth was 6.6% in 2011, though is expected to moderate to just under 3% in this year. Ecuador’s recent history of default and inconsistent economic policies remain as credit constraints, the agency notes. The outlook is stable.
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Miner Puts up Equity for Acquisition
Peruvian miner Minsur plans to put in $300m worth of fresh equity capital into its Cumbres Andinas subsidiary, it says, to help finance the acquisition of a stake in the Marcobre copper project. After the transaction, Minsur will hold 99.96% of Cumbres’ shares. It is already seeking a $200m loan to help with the purchase. In April, Minsur agreed to acquire 70% of Marcobre from Hong Kong’s CST Mining for $505m.
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Mexicans Clinch Deals as Local DCM Remains Open
While other regional markets have slowed to a stop, Mexico’s domestic bond market remains active, with Banorte raising MXP3.2bn ($232m) in subordinated bonds and Infonavit scooping up MXP1.97bn Wednesday. “Investors are looking for new names to diversify funding, but those names have to be solid names with a good rating of minimum AAA or AA,” says a Mexican DCM banker. Such was the case for Mexican mortgage and social services entity Infonavit, which raised MXP1.97bn, through the Infonavit Total unit, in UDI-denominated RMBS 2040 bonds. The 4.20% pricing comes inside of the 4.60% it saw on a previous issuance. Demand hit 2.5x, and at least 75% of the sale was allocated to pension funds, according to a banker on the deal, with the remainder coming from private banking, bank treasuries and insurance companies. Banorte issued MXP3.2bn in a 10-year NC5, at TIIE+150bp, inside price thoughts of TIIE+175bp. Ixe led the AAA-rated deal. Demand was heard driven by institutional investors and retail accounts. “Outside of Mexico there is volatility, but there is a lot of liquidity and stability in Mexico,” says another DCM banker, noting that spreads have remained stable this year. With pension funds showing appetite, more names are waiting in the pipeline. Holding Monex is scheduled to raise up to MXP1bn today in what would be its domestic market debut. The financial services company’s 2015 notes will be issued under a MXP2bn program, and pay a spread to the TIIE. BBVA Bancomer is managing the transaction, rated A on a national scale. Next week, issuers will try to break the FIG dominance of the market. Holcim Mexico was scheduled to issue up to MXP3bn June 13, at 5 and 10-year maturities. Banamex, BBVA, and Santander are managing. Also on that day, Penoles is to issue $200m-$240m in 10-year dollar-denominated bonds, through Banamex, BBVA Bancomer and Santander. Mexicans have issued $3.09bn-equivalent this year through Wednesday, according to Dealogic data, down from $6.58bn-e
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Sura Adds JPM to Co-Investor List
Grupo de Inversiones Suramericana (Grupo Sura) has brought in JPMorgan as a co-investor in its Sura Asset Management Espana unit, for $178m, it says. The US bank gets a stake of “less than 5%” in the vehicle created last year to hold assets from the $3.76bn acquisition of pension and insurance businesses Sura acquired from ING. Grupo Bolivar, UBS, the IFC, General Atlantic and Bancolombia have previously bought in to Sura, to help fund its expansion. Sura brought in the co-investors as an equity follow-on to fund the deal fell short of a $2bn-equivelant target. JPMorgan’s entry price matches the price Sura paid ING, Bolsa y Renta says. Sura now holds 66% of the unit.
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Caixa Enters IT Deal
Brazil’s Caixa Participacoes (CaixaPar) has agreed to acquire a 22% stake in Brazilian IT services company CPM BraxisCapgemini from controller Capgemini, it says. The deal also makes CPM a preferred IT supplier to the Caixa Economica Federal bank for 10 years. CaixaPar is acquiring the stake through the simultaneous purchase of shares from existing shareholders and subscription to a BRL121m ($60m) capital increase, for a total investment of BRL321m. It will become the second-largest shareholder in CPM after France-based Capgemini, which will hold 58.8%. The transaction is subject to regulatory and Central Bank approval, and is expected to close in the coming months. CPM already boasts a relationship with Bradsco that makes it one of the larger IT providers to Brazil’s financial sector.
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Banorte Talks Price
Mexican lender Banorte is looking to pay TIIE+175bp-area for up to MXP3.2bn ($232m) in 10-year NC5 Tier-2 subordinated bonds, scheduled to price today in the local market, according to a person familiar with the deal. This will be the fifth issuance under a MXP15bn program. Proceeds will be used to fund working capital. Ixe is leading the deal, rated AAA on a national scale. Banorte last visited the bond market in 2009, when it priced a MXP2.2bn 2019 bond at TIIE+200bp, according to Dealogic data. The bank visited the dollar market in July 2010, when it sold a $300m 2015.
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PacRu Makes Colombian Buy
Pacific Rubiales has agreed to acquire fellow Toronto-listed Colombian oil and gas company PetroMagdalena for CAD253m ($244m), it says. Pacific Rubiales is paying CAD1.60 for each common share of Magdalena, and CAD0.25 per share purchase warrant. It plans to fund the deal with cash on hand. PetroMagdalena has a market cap of about CAD187m and holds 19 properties in 5 basins in Colombia. RBC and Norton Rose Canada advised Pacific Rubiales. “The PetroMagdalena acquisition was not within our expectations, as the company had not in the past showed interest due to its size. However, we belive the company is acquiring light crude reserves at a reasonable price that should benefit its current production,” Bolsa y Renta says in a report.
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Fitch Lowers Axtel
Fitch has lowered Axtel’s rating to B from B+, it says, due to higher than expected leverage levels due to weak operating performance and continued negative free cash flow. “Considering [annual] results as of March 31, 2012 and current level of the [peso], a covenant breaching of the syndicated loan is getting closer. While it is likely that a waiver can be obtained for the syndicated loan if the covenant is breached, as banks participating in the syndicate are relationship banks of the company, this can put additional pressure to Axtel’s financial flexibility,” the agency says. The outlook is negative.
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Interacciones Targets Bond
Mexico’s Banco Interacciones is looking to issue up to MXP1.5bn ($105m) in 3-year bonds, according to a regulatory filing. The notes will pay a spread to the TIIE benchmark. The floating-rate notes are rated A on a national scale, and will represent the third issuance under a senior debt program of up to MXP10bn. Proceeds will be used to maintain liquidity and general corporate purposes. Interacciones is managing the sale itself. Interacciones specializes in sub-national and public infrastructure financing in Mexico.