Belize has emerged from the financial crisis in fairly good shape compared to other countries, but a high level of nonperforming loans may prove challenging, the IMF says in its recent mission statement. This comes after the Belizean government suddenly decided in late June to nationalize troubled utility Belize Electricity Ltd (BEL), marking the second takeover of a company under the administration of Prime Minister Dean Barrow. “The mission also underscored the need to protect the public sector balance sheet from the recently nationalized entities, and the need to further develop a clear plan of action to mitigate contingent fiscal liabilities,” the IMF says. The nationalization of BEL dented investor confidence and raised fears that it would add further fiscal burdens to a country that defaulted just 5 years ago. “We concur with the IMF’s warnings about recent nationalizations and contingent liabilities,” say analysts at Citi. The US shop says the market should also keep an eye on developments at Belize Sugar Industries (BSI), which is under financial distress and is forcing the government to seek a private sector acquirer for the company to avoid default on loans. Citi names Honduran bank Banco Atlantida as a possible buyer. “We recently argued that if a deal is not reached, it could open the possibility for a bailout from the government, thereby increasing the government’s already beefed up contingent liabilities,” Citi says. On the positive side, the IMF says manufacturing and agricultural sectors are supporting economic growth this year and helping stabilize foreign reserve levels so that they can cover about 3 months of imports of goods and services.
Category: Regions
Colombian Bank Readies Shares
Banco de Occidente is preparing to sell COP200bn ($112m) in shares in Colombia’s local market following the approval of its prospectus Wednesday. The beginning of the sale period should be announced within the next two weeks. The bank plans to sell 6.06m shares at COP33,000 each, as it looks to raise funds to increase its capital base. Existing shareholders have first rights on the offer. The bank’s own brokerage and Deceval are managing the sale.
Celfin Clarifies BTG Merger
Celfin Capital will become a part of the BTG Pactual group, says the Chilean shop. The announcement helps clarify how the merger between the two banks might proceed. The Chilean brokerage with operations in Colombia and Peru and the Brazilian investment bank would “merge and all of the business and operations of Celfin and its subsidiaries would become part of the BTG Pactual group,” it says in a regulatory filing. It also notes that Celfin would “maintain in general terms the current administration of Celfin Capital, which would have as a principal responsibility the development, management and implementation of the BTG Pactual Group in the Andean region, including Chile, Peru and Colombia.” If completed, the deal would give BTG a foothold in the three Andean economies it has been eyeing, as well as allow Celfin to gain exposure to the Brazilian market. BTG announced talks about a merger Wednesday, without offering many details.
Davivienda Upsizes, Raising $279m Equivalent
Colombia’s Banco Davivienda has sold COP500bn ($279m) in domestic bonds, upsizing from COP400bn after getting 3.4x demand. A COP90bn 2013 tranche pays the IBR+1.68%, a COP90bn inflation-linked 2015 tranche pays 3.60%, a COP159bn inflation-linked 2019 tranche pays 3.99%, and aCOP161bn inflation-linked 2022 potion pays 4.23%. Davivalores managed the sale, rated AAA on a national scale.
Finandina Places Domestic Debt
Colombia’s Banco Finandina has sold COP72bn ($40m) in domestic bonds, after garnering some COP97bn in demand. A COP41bn 2013 tranche pays the IBR+2.09%, a COP12bn 2014 piece pays IBR+2.50%, and a COP19bn 2016 inflation-linked portion pays 4.20%. Corredores Asociados led the sale, rated AA+ on a national scale.
Goldman to Issue Europeso
Goldman Sachs plans to issue up to MXP1bn ($80m) in floating rate Europeso bonds with talk heard in the TIIE plus 90-100bp range. The 3-year RegS only transaction is scheduled for the first week of September and will be listed on the Luxembourg Stock Exchange. The trade is being compared against Nissan Mexico’s MXP2.5bn 3-year, Banco de Credito e Inversiones’s (BCI) MXP2bn 3-year and BNP Paribas’s MXP2bn 5-year. Those bonds were priced anywhere between 40bp-50bp over TIIE, making the Goldman Sachs issue look cheap. But according to a banker watching the trade, this deal is coming wider to compensate for risk perception given that Goldman Sachs’s 5-year CDS is trading at 250bp versus 157bp for Mexican sovereign protection. Still from Goldman Sachs’ perspective, funding costs are still attractive as the notes are expected to be swapped back at Libor+180bp, he adds. The bonds are rated A1/A/A+ on a global scale.
Mexichem Price Talk Heard
Price talk on Mexichem’s 5-year floating rate local bond is being heard at 50bp over TIIE. The Mexican chemical conglomerate will issue up to MXP2.5bn ($199m) in 2016 bonds early September to repay bridge loans used to take out MXP2.5bn in 2014 bonds. Leads are Banamex, BBVA Bancomer, HSBC and IXE. This comes as the company prepares to close a $1bn 3-year revolver via Bank of America, BBVA, Citigroup, HSBC and Santander. Pricing on the loan is tied to a ratings grid offering L+90bp out of the box for utilization of less than 33%, 95bp for utilization of between 33%-67% and 100bp for over 67%. Spreads tighten or widen by 20bp for each ratings notch above or below BBB-. Mexichem is rated AA/Aa3 on a national scale, and carries a BBB minus rating for foreign currency issues.
Mexico Expected to Maintain Rate
Mexico’s central bank is expected to keep the country’s benchmark interest rate at 4.5% Friday. The case for the bank’s neutral stance was strengthened earlier this week when authorities announced lower than expected inflation numbers. “Against a backdrop of moderate real activity expansion, still negative output gap, well contained inflation dynamics, and exceptionally accommodative monetary conditions for the foreseeable future in the United States given the uninspiring real business cycle conditions, the central bank is likely to remain on hold also for the foreseeable future,” Goldman Sachs says. The shop sees the bank likely holding until 2013, with a growing probability of rate cuts if domestic real economic activity decelerates.
Ecopetrol Sale Falls Short
Ecopetrol got COP2.40trn ($1.34bn) in demand for its equity follow-on during the order period that closed last week, falling just short of its COP2.5trn target. The state-controlled oil producer launched the deal July 27, announcing it would sell 675.7m shares at COP3,700 each. Since then, global equity markets have taken a turn for the worse, with the share price dipping below the COP3,700 level. The overhang from future Ecopetrol sales – the government aims to sell up to 9.9% of the company in pieces beginning next year – also may have hurt. Still local analysts and brokers had expected Ecopetrol to squeak by. Orders came in from 228,000 accounts, owing to heavy marketing efforts focused on Colombia retail investors. Credit Suisse, JPMorgan and Bancolombia managed the sale.
Celfin Tie-up to Give BTG Andean Path
BTG Pactual’s proposed merger with Chilean investment bank Celfin is seen giving the Brazilian investment bank a leg-up in establishing a beachhead to expand into the Andean region. The union between the two shops will create Latin America’s largest investment bank, BTG says, and marks its first Latin American expansion outside of Brazil’s borders. The two announced the beginning of merger talks Tuesday, but gave few details about how they are expected to proceed. It is thought however that BTG will most likely buy most or all of Celfin. “It looks like an acquisition given the difference in size between the two,” says a senior official at another Santiago-based bank. Celfin lists AUM at $5.5bn, while BTG has more than $60bn under management. A value for Celfin, a private partnership, is difficult to pin down. Celfin officials have expressed a desire for Brazilian exposure as part of their bid to become a regional investment bank after already expanding into Colombia and Peru. But gaining a foothold in the region’s largest market was clearly difficult. Brazilian rival Itau tapped into Chilean wealth management through a JV with Chilean brokerage Munita, Cruzat & Claro, in which MCC still operates independently. Celfin has cross-selling agreements with Mexico’s GBM, and its Brazilian unit. BTG CEO Andre Esteves told LatinFinance earlier this year that moves into Colombia, Chile and Argentina were likely next steps, and to expect operations there as soon as this year. BTG recently filed initial registration with the CVM, the first step towards an IPO. Founded in 1988, Celfin is owned by 6 partners, including Juan Andres Camus and Jorge Errazuriz.