Mexico is the best place in LatAm for companies, according to the World Bank’s Doing Business 2011 survey. Despite worsening drug-related crime, Mexico has moved up 6 places in the global ranking to 35 in the study, released last week. “The region’s top-ranked economy, Mexico launched an online one-stop shop for initiating business registration, improved construction permitting, and increased options for online payment of taxes,” says the multilateral. Twelve of 20 economies in LatAm have reformed business regulation to expand opportunity for local firms in the past year, according to the World Bank. Peru improved business regulation the most in the region, moving up 10 places in the global ranking on the overall ease of doing business, to 36th out of 183 economies. Peru was also among the world’s 10 most active economies, improving in 4 of 9 areas covered by the report. It created an online one-stop shop for business registration, improving the ease of business start-up more than any other economy. Peru also streamlined permits for construction, introduced fast-track procedures at the land registry, and eased trade with a new Web-based electronic data interchange system, the World Bank adds. “Economies in Latin America are improving regulation with faster, transparent, electronic systems,” says the multilateral. Chile moved up to 43 from 53 in the global ranking, while Grenada did best in the Caribbean, it adds. Doing Business analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and closing a business. It does not measure security, macroeconomic stability, corruption, skill level, or the strength of financial systems.
Category: Regions
Odebrecht Bringing Drillship Jumbo
Odebrecht is expected to price its $1.5bn 10-year drillship bond this week, and potentially as soon as Wednesday, according to a banker on the deal. Pricing is expected to come in at the tight end of mid-to-high 6% guidance. Although investors are requesting more information on the 8.1-year, BBB/Baa3 amortizing deal through the Odebrecht Drilling Norbe VIII/IX unit, the book is still growing, according to bankers on it. Santander, HSBC, Deutsche and Banco do Brasil are managing the sale. The notes are backed by intercompany loans granted to each drillship, according to Fitch.
Nicaragua Project Closes $160m Financing
RAM Power, a US renewable energy company, has closed $160m in debt financing, via IFC, which will go towards the second phase expansion of its San Jacinto-Tizate geothermal power project in Nicaragua. The borrower would not disclose the spread over Libor on the floating rate loan, but the company expects to swap it to a fixed-rate loan for 7%-8%. Initial drawdown is expected to occur in December 2010, with final maturity in 13 years and an 8.5-year average life for the senior debt. The $140m in senior construction and term loans and $20m in subordinated debt are available for general corporate purposes, in order to complete the second phase of this project. Combined with phase 1, it will provide 72MW of power to Nicaragua, to be completed by the end of 2011, according to Hezy Ram, CEO of Ram Power. IFC, IDB, CABEI, DEG, FMO, OeEB and Proparco were lenders on the transaction. Ram says that IFC all of the subordinated debt along with $30m in senior debt. IDB provided $30m in senior debt, with Proparco providing $20m, DEG $19m, FMO $19m, OeEB $15m and Cabei $7.6m. “We had well over $200m in demand for $140m of senior debt,” says Ram.
Peru to Get IDB Loan
The IDB has approved a $110m loan to Peru to reduce poverty by strengthening its principal social protection and labor programs. The loan comes from IDB’s ordinary capital and has an amortization period of 20 years with a 5-year grace period and an interest rate based on Libor.
MetAnalisis Reports Carso Spin-off Approval
A meeting of Grupo Carso shareholders Thursday approved the spin-off of the group’s mining and real estate businesses, according to a research report by MetAnalisis. Each Carso shareholder will receive proportional shares in each of the 3 businesses, which are to be listed on the bolsa, according to MetAnalisis. The transaction is expected to be completed by the end of the year. Representatives from Carso could not be reached for comment.
AES Dominicana Funds Bond Tender
AES Dominicana has raised $284m in new 10-year NC5 bonds to fund a buyback of more expensive debt. The first cross-border issue from a Dominican corporate in more than 3 years drew about $800m in orders, according to bankers on the sale. The B minus bond priced at par with a 9.50% coupon, the tight end of 9.50%-9.75% yield guidance. The bond traded up 2 points Friday afternoon, according to a trader. The subsidiary of US-based power company AES launched a tender last week for any and all of the $156m in AES Dominicana 11.000% of 2015 bonds and $102m of 10.875% of 2013s issued by its Itabo unit. It is offering holders $1,031.25 per $1,000.00 for the AES bonds and $1,030.50 per $1,000.00 for the Itabo bonds, plus a $30 premium on each if tendered prior to a November 10 early deadline. The offer expires November 26. Credit Suisse and Deutsche Bank managed both the new bond sale and the tender offer. The last Dominican corporate cross-border issue was a $175m 10-year from EGE Haina in April 2007, according to Dealogic.
China’s CCB Pushes RMB Trade
China Construction Bank (CCB) sees scope to significantly increase volume in its settlement business supporting RMB-denominated trade between LatAm and China. “We think it could be a very big opportunity for our bank,” says John Weinshank, head of trade finance and corporate banking at CCB’s New York office. Since the end of April, CCB has done over $300m in deals for international trading companies shipping LatAm commodities to China. Much of it is Argentine soya beans, but the deals also include softs and metals from Brazil and Chile. “By the end of the year it will be more like $500m [in deal volume],” Weinshank tells LatinFinance. Putting contracts in RMB can give suppliers to China an edge over competitors, while also decreasing their reliance on the dollar, says the banker. Payment terms are given up to 360 days and CCB settles for the LatAm exporter in dollars. “Their functional currency is not the dollar, and the dollar’s appreciating while the RMB’s appreciating,” says Weinshank. “If they’re on the selling side, it would make more sense for them to have a more valuable currency that they will translate back to their local currency,” he adds. The product is particularly suited to clients with global flows. They can have proceeds remitted in dollars, or keep an RMB deposit and benefit from any appreciation in the Chinese currency. RMB deposits would also generate a higher rate than USD. “If Codelco or Vale came to us and said we have RMB exposure, can we settle it with you, we’d be delighted,” says Weinshank. The CCB business is run from New York, but the bank is considering establishing offices in region. A Brazil branch looks most imminent, following several trips to the country by senior CCB bankers. The New York branch is not yet authorized to lend to LatAm corporates. CCB is one of the biggest banks in the world.
Ecuador Gets a B
Fitch has upgraded Ecuador’s foreign currency issuer default rating to B minus from CCC, with a stable outlook, because of increased bilateral lending and a decrease in financing constraints due to the recovery of international oil prices. Loan agreements with China worth $2.6bn and financing from the social security agency have provided Ecuador with resources for budgetary support and infrastructure spending, says Fitch. However, the upgrade did affect spreads in the secondary bond market, with analysts and economists saying the rating is still not high enough to attract institutional investors. “There has been very little debt being traded since the default, and I don’t expect this to have a significant impact,” Eduardo Checa, president at Analytica Securities, tells LatinFinance. A LatAm economist says institutional investors will remain uninterested in Ecuador’s debt. The country’s ratings are constrained by weak willingness to service debt and limited transparency and disclosure of public finances information, adds Fitch. “Ecuador’s limited sources of recurrent and reliable financing as well as the high dependence of external and fiscal accounts on oil prices will continue to weigh on the sovereign’s capacity to service its outstanding debt commitments,” says Erich Arispe, director in Fitch’s sovereign group. Fitch adds that Ecuador’s growth prospects remain low for regional standards. The report adds that while enhanced willingness or strengthened capacity to service outstanding debt could improve Ecuador’s credit rating, deterioration in fiscal and external accounts or further unwillingness to service outstanding debt could lead to a ratings downgrade.
IDB Gives Ecuador $100m Loan
The IDB has given Ecuador a $100m 25-year term loan, with a 4-year grace period and a variable interest rate based on Libor, to help transform the health sector in Ecuador. It will improve the quality of health services and also go towards medical information system and management of the Ministry of Public Health.
Seoul Appoints Senior LatAm Advisor
Botsford Global says it has been appointed senior advisor for LatAm and the Caribbean to the Korean government. Washington DC-based start-up Botsford will help source projects for Korean corporations throughout the region, including greenfield mining ventures, company founder Mark Botsford tells LatinFinance. Korean companies are expected to team up with US entities to invest in LatAm. Botsford is also in talks with the Singapore government for a similar arrangement to provide strategic LatAm advice. It expects to have a decision on that by the end of November. Botsford Global was set up in July. Botsford previously managed family investments locally and internationally, including defaulted Argentine bonds. Before that, he was senior advisor at Adalbert Krieger Vasena & Associates and has advised international companies including Phillip Morris and Exxon on their business in Argentina.