As expected, Banxico has left the monetary policy rate at 4.50%. The bank says in a statement that industrial production and exports have been growing at a high rate, but that this could be affected by the slowdown in the US economy, where unemployment remains high and consumption is still below pre-crisis levels. In a report, Barclays says it believes that in the most likely scenario, Banxico will maintain the current 4.50% rate for several months. Morgan Stanley says in a report that it expects the rate to remain at 4.50% for the rest of the year, increasing to 5.50% by the end of 2011.
Category: Regions
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Grupo KUO Plans MXP Issue
Mexico’s Grupo KUO is looking to issue MXP700m of 5 year bonds in November, according to a filing on Mexico’s bolsa. The bonds will pay a spread over TIIE (which closed on Friday at 4.87%) and have a BBB + rating on a national scale. IXE is the bookrunner on the deal. Proceeds will be used to refinance liabilities and for other corporate purposes. KUO has holdings in the consumer goods, chemical and automotive industries.
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Pardo Consolidates ASUR Control
Fernando Chico Pardo last week completed his acquisition of the remaining 49% stake in Inversiones y Tecnicas Aeroportuarias (ITA) he did not own. Chico Pardo acquired the stake from Copenhagen Airports, which recorded a $51.7m equivalent adjustment to their profit as a result. Chico Pardo is the chairman and CEO of Grupo Aeroportuario del Sureste (ASUR), a Mexican airport operator. He is also the founder of PE firm Promecap. ITA holds 100% of ASUR’s Class BB shares, approximately 7.65% of ASUR’s capital. According to SEC documents, Chico Pardo now owns approximately 73.9% of Asur, both directly and through his holding companies Agrupacion Aeroportuaria Internacional II and Servicios de Estrategia Patrimonial. ASUR did not return calls seeking comment.
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IFC Guarantees Honduran Loan
The IFC is guaranteeing 36% of a subnational loan for Honduras’ central district municipality for $44m equivalent in local currency. This is the first time that the IFC has guaranteed a loan in Honduras not backed by the sovereign, says Javier Atala, general manager and executive vice president of Banco Financiera Comercial Hondurena (Ficohsa), lead arranger on the loan. The loan has an 8-year term and pays 16%, he tells LatinFinance.. Besides Ficohsa, others participating in the syndication are Banco Atlantida and Banco de Occidente. Out of the 16% interest rate, he says the banks syndicating the loan will divide 14% in equal parts and the IFC will get the remainder as commission. Ficohsa is lending $14.7m equivalent, Occidente $13.2m and Atlantida $13.2m, Atala says. The loan will be used to repair roads and implement an early flood warning system in the district, which includes Tegucigalpa.
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Ecopetrol Outlook Revised Up
Ecopetrol’s outlook has been revised to positive from stable by Fitch, after Colombia’s sovereign rating outlook was revised. Ecopetrol’s foreign and local currency issuer default ratings remain the same, at BB+ and BBB- respectively. Colombia’s outlook revision to positive reflects the country’s economic resilience and improved macroeconomic performance in relation to its peers, says Fitch. The country’s expected increase in oil and mining is also likely to benefit overall economic activity. Ecopetrol’s ratings reflect its strong financial profile, improving production capacity and adequate reserve levels, adds Fitch. The company’s growth strategy and associated capital investment are also considered aggressive. The ratings reflect the close link with the Republic of Colombia, which owns 89.9% of Ecopetrol.
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BP Reported Selling Venezuela Assets
A BP spokesman declines to comment on statements by German Khan, CEO of BP joint venture TNK-BP, stating that his company would acquire several of the oil company’s assets in Venezuela. According to press reports, Khan told reporters TNK-BP would acquire 16.7% of Petromanagas, 40% of Petroperija and 26.6% of Bougeron. BP also declined to comment on the potential value of those assets, though they have been estimated at $1bn, according to an industry banker not associated with the deal. Khan has been looking for assets to acquire in LatAm, the banker says, but this is his first acquisition of oil assets on the continent. He had previously acquired non-oil & gas assets outside of Venezuela, the banker says.
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Guatemalan Bank Revisits Bolsa Dream
Guatemala’s Banco Industrial is reconsidering a listing on Mexico’s Bolsa, which it tried to do before the 2008-2009 credit crisis put paid to the transaction. Guatemala’s largest bank would consider a 20%-25% float, Luis Prado, director of the bank’s international division tells LatinFinance, noting that the exact timing has yet to be determined. Fresh cross-border debt issuance, including DPR securitizations, which it last raised in 2005 for $200m, could also be an option to fund expansion, he says. “Our goal is to expand through Central America,” Prado says. Already operating in Honduras, the bank opens in December in El Salvador, after receiving the appropriate licensing this year. Panama and Costa Rica are more distant possibilities for organic or acquisition-based expansion, he says. The bank will focus on organic growth in the domestic market to keep it competitive in the intensifying credit market, Prado says, but will not focus on domestic M&A. Fitch last week upgraded to positive from stable the BB credit rating of Industrial. The improved outlook reflects the bank’s strong local franchise, resilient asset quality and well-contained credit costs, adequate funding and liquidity, and good and stable profitability, says the agency. Fitch adds that the rating could be lifted if the bank sustains these trends and further improves capital adequacy. Industrial had 27% of the Guatemalan banking system’s assets and deposits as of June.
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PDVSA Sells 50% of Ruhr Oel
PDVSA has agreed to sell a 50% stake in Ruhr Oel GmbH to Russian oil and gas company Rosneft for $1.6bn excluding PDVSA’s share of crude inventory and receivables to be valued at closing, according to the buyer. Ruhr Oel GmbH is a 50/50 downstream JV between BP and PDVSA with stakes in 4 German refining and petrochemical complexes. Venezuela’s national assembly has also approved a 60/40 JV between PDVSA and ENI Lasmo, a subsidiary of Italian oil company ENI to develop Junin Block 5. According to a statement from the national assembly, the block is expected to produce up to 240,000 barrels of super heavy crude a day.
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Issuers Return to Low Yield Trough
Mexico’s Pemex, and Argentina’s Cordoba Province and IMPSA have retapped their recent bond issues, joining the Province of Buenos Aires this week in adding on at tempting prices. “Spreads have been tightening and we’re not sure when this rallying market will fade. It’s in the interest of those looking to add a bit to do so,” says a London-based EM investor buying Cordoba, which he says priced fairly. Cordoba stepped in for $196m while Pemex has added $250m to its perpetual sold in September, taking advantage of a rally in Mexican corporates and status among investors as the best-performing of a group of perpetual bonds issued in September. Pemex reopened its 6.625% of perp NC5 at 103, the level at which the deal had been announced Thursday morning. The price represents about a 75bp discount from secondary levels of around 104, investors say. Orders were heard reaching $900m. Credit Suisse managed the Baa1/BBB/BBB sale that brings the outstanding size to $1bn. Citi and HSBC managed the original sale. Cordoba, meanwhile, retapped its 12.375% of 2017 at 103.000 to yield 11.716%. Investors spotted the B3/B bond at 104.5-105.0 the day before. The province went for the retap due to reverse inquiry and secondary market performance, bankers say, noting $800m in orders. Citi and UBS, the original leads, managed the sale. Cordoba now has $596m in outstanding 2017s, its maximum authorization say bankers on the deal. The first sale raised $400m on more than $1bn in demand. Finally, IMPSA came out for $50m more of the 10.375% 2015 bonds it sold in September to fund a tender offer at its WPE unit. The B3 deal reopened at 99.000, for a 10.538% yield, through original leads Bank of America Merrill Lynch and UBS.
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Mexico Expected to Hold Rate Steady
Mexico’s central bank is expected to leave its monetary policy rate unchanged at 4.50% today. Morgan Stanley, which agrees with market consensus, says in a research report that unlike other countries in the region that are fighting currency appreciation, Mexico’s currency is not misaligned and inflation trends have been benign. Bank of America Merrill Lynch also expects rates to remain the same and says any intervention to control the currency is unlikely.