The market expects Colombia’s central bank to keep its monetary policy rate on hold at 3.00% today. Morgan Stanley says growth is in line with expectations and inflation remains below target. It expects the rate to tighten to 6.00% by the end of 2011. Barclays also sees the rate on hold with tightening beginning in April, although it says there is a risk it could begin later in the year.
Category: Regions
Posted inDaily Brief
Jones Day Opening in Sao Paulo
Global law firm Jones Day is opening an office in Sao Paulo, from which it will handle all LatAm-related business. It already has an office in Mexico City. Luis Riesgo, chair of the LatAm practice, will move to Sao Paulo to serve as partner-in-charge of the new office. Riesgo served as partner-in-charge of the Madrid office of Jones Day for the last 5 years.
Posted inDaily Brief
Helm Bank Issues Bonds
Colombia’s Helm Bank has issued COP400bn ($218m) in local bonds. The AA+ issue was done in 4 tranches, all priced at par. A 3-year COP97.9bn piece pays IBR plus 1.64% to yield 4.75%, a 3-year COP118.2bn piece pays IPC plus 3.00% to yield 5.35%, a 5-year COP67.2bn piece pays IPC plus 3.50% to yield 5.86% and a 7-year COP117.5bn piece pays IPC plus 4.12% to yield 6.49%. Proceeds will be used for working capital. Helm’s own brokerage managed the sale.
Posted inDaily Brief
Dow Jones Launches Peru Indices
Dow Jones Indexes has launched the LATixx Peru Government PES Bond and the LATixx Global Peru Government USD Bond Indexes. The market-cap weighted indexes are designed to measure the performance of the Peruvian government’s local and global issues in PES and USD. Back-tested historical data is available from January 1 2009, with the base date of December 31 2008 and an initial value set to 1,000, Dow Jones says. As of September 30, the LATixx Peru Government PES Bond Index had a year-to-date performance of 3.49%. The LATixx Global Peru Government USD Bond Index rose 16.62% over the same period.
Posted inDaily Brief
Sare Builds Follow-on
Sare Holding has priced a MXP930m equity follow on at a 1.6% discount to Wednesday’s MXP3.10 close. The Mexican homebuilder sold 305m shares at MXP3.05 each. Demand topped MXP3bn, according to a banker on the sale, including about MXP1bn from private banking, MXP900m from international institutional investors, and MXP500m from the local institutional buyside. Sare plans to use proceeds to increase production and boost efficiency following a debt restructuring, using proceeds to provide working capital for completing projects. BBVA and Santander managed the transaction. It is the sixth equity offering from Mexico this year. The market now turns its attention to the expected MXP15bn IPO of OHL Concesiones Mexico, set to price November 10.
Posted inDaily Brief
LAN Buys Colombia Airline
Chilean airline LAN says it is acquiring a 99% stake in Colombian peer Aires for $32.5m. Analysts believe the buyer will be assuming Aires’ debt, since the acquisition price seems low. LAN says the price will be adjusted according to variations in Aires’ debt between the value at closing of the transaction and the value as stated in the company’s financial statements as of August 31. “This is a very good price for a company that has a 22% market share,” says Cristina Acle, a Chile-based equities analyst with Corp Group. Felipe Mercado, an equity analyst with Banchile agrees. “Colombia, with 10m passengers a year, has double the volume of other LAN markets such as Chile and Peru,” says Mercado. Both analysts believe it is probable that LAN will pay for Aires with cash on hand. LAN reported Q3 profit of $106m. Aires, founded in 1980, is the second largest domestic airline in Colombia. It provides service to 27 domestic destinations and 3 international destinations, and has a fleet of 24 airplanes. Analysts were unable to determine the enterprise value or debt load of the privately held company. LAN officials decline to say if there were any financial advisors involved.
Posted inDaily Brief
Digicel Taps CEO for Honduras
Jamaica-based cell phone company Digicel says it has appointed Damian Blackburn as CEO of its Honduras operations. Blackburn, who had previously been regional CEO overseeing 12 Caribbean markets, joined Digicel 2.5 years ago. He replaces Ghada Gebara, who left the company after 5 years to pursue private projects.
Posted inDaily Brief
Alfa Heard Bringing Acquisition Loan
Mexican conglomerate Alfa is understood to have mandated a syndicated loan to back the $600m purchase of Eastman Chemical assets in the US. A $600m 3-year bullet facility is expected to be syndicated next month. Credit Suisse and HSBC are heard as the leads on the deal that hits a LatAm bank market starved for assets and hungry for yield. The purchase of Eastman’s polyethylene terephthalate resins business and related assets and technology of its Performance Polymers segment was done by Alfa unit DAK Americas. BAML advised Eastman while HSBC is understood to have worked on the buyside. Fitch Wednesday downgraded Alfa sub Grupo Petrotemex to BB (stable) from BB+, including notes issued by DAK, amid fears over leverage incurred in the purchase. On a pro forma basis, Fitch estimates that Petrotemex’s total debt-to-Ebitda, considering 12 months of Eastman assets operations, could reach 3.3x in 2010 and gradually decrease. This compares negatively with a total debt-to- Ebitda ratio of 2.2x for the 12 months to June 30, and fall outside Fitch’s prior leverage estimation of 2.0x to 2.5x. Nonetheless, Fitch notes that the investment is strategic and positive for Petrotemex, and should strengthen its business position, as it gains PET market share in North America. “It should also bring potential synergies to Petrotemex’s operations, provide the company with access to new technologies and improve its vertical integration,” says Fitch.
Posted inDaily Brief
Analysts Like Bimbo/Sara Lee
A potential acquisition of Sara Lee’s bread business by Grupo Bimbo gets the approval of analysts, who say the deal would be non-dilutive to Sara Lee, while Bimbo would likely be able to improve the unit’s margins. Deutsche Bank runs potential Ebitda multiples for the acquisition under a variety of scenarios and prices. “The $1.3bn case should probably be everyone’s base case,” days Deutsche. It adds that this would be “attractive” if a sale includes all of Sara Lee’s baking assets, such as operations in Spain and Australia. Deutsche says a $1.3bn price would yield a 7.2x EV to 2010 Ebitda and 6.6x 2011E Ebitda. If Bimbo were to pay the same price for only the North American assets, the multiple would rise to 13.0x to 2010A Ebitda. The Spanish operations include assets built by Bimbo’s founding family and later acquired by Sara Lee. According to Deutsche, Bimbo had tried and failed to reacquire the assets from Earthgrains. Meanwhile, Sara Lee would help expand Bimbo’s already significant presence in the US. The market now represents 43% of net sales, compared with the 46% that come from Mexico. Bimbo greatly expanded its presence in the US with the $2.5bn acquisition of Weston brands including US brands Arnold’s, Boboli, Brownberry, Entenmann’s, Freihofer’s, Stroehmann and Thomas’ in 2008. Acquiring Sara Lee would help provide Bimbo with more of a national footprint, with penetration of the Midwest, Southeast and Southwest markets, according to John Baumgartner, analyst with Telsey Advisory Group. In regions where Bimbo and Sara Lee overlap, Bimbo will be able to immediately consolidate delivery routes to improve operating margins, Baumgartner says. Bimbo declines to comment on speculation it is now the lead bidder for the business. Bimbo is said to have retained Atlas Advisors for the acquisition.
Posted inDaily Brief
Banorte Welcomes New Chairman
Mexican financial group Banorte has named Guillermo Ortiz as its new chairman effective in March 2011. Ortiz was head of Banxico, Mexico’s central bank, until early 2010, when Agustin Carstens took the position. Current chairman Roberto Gonzalez will become chairman emeritus. The appointments must now be approved by company shareholders.