Barclays believes Peru’s central bank will hike the policy rate 25bp to 1.75% today and to 3.00% by year-end. It previously expected no hike this month and the rate ending within a 2.25%-2.50% range this year. Morgan Stanley, meanwhile, thinks the rate will end 2010 at 3.25%. In addition, it revised GDP growth forecasts for 2010 to 7.0% from 4.9%. In 2011, it now believes GDP will grow 6.4%, up from a previous forecast of 5.5%.
Category: Regions
Posted inDaily Brief
Panama Makes High-Grade Hat Trick
Moody’s is the third ratings agency to upgrade Panama to investment grade, changing the sovereign’s rating to Baa3 (stable) from Ba1. Moody’s cites a significant improvement in Panama’s fiscal and debt positions. “The anticipated positive impact of fiscal policy initiatives on government accounts and prospects for sustained economic growth are at the core of the upgrade,” says vice president and senior analyst Alessandra Alecci. “The Panama Canal expansion and an ambitious infrastructure investment program are likely to support strong economic growth in the next few years, boding well for debt dynamics.” Fitch upgraded Panama to IG in March and S&P did so in late May.
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Investors Flock to Popular Bonds
Colombia’s Banco Popular issued COP300bn ($152m) in local bonds. It originally intended to issue COP200bn and said it would increase the amount to COP300bn depending on demand, which soared to COP577bn. The AAA rated notes were issued in 6 tranches. An 18-month piece that sold COP43.3bn pays 0.95% over DTF, an 24-month tranche that sold COP38.1bn pays 1.10% over DTF, a 24-month piece that sold COP65.4bn pays 2.90% over IPC, a 36-month piece that sold COP47.5bn pays 3.23% over IPC, an 18-month tranche that sold COP31.0bn pays 1.20% over IBR and an 18-month tranche that sold COP74.5bn pays a fixed rate of 4.98%. Proceeds will be used for working capital. Popular handled the sale itself.
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Bimbo to Meet US, European Investors
Bimbo plans to set out Monday to meet the buyside in the US and London on a weeklong “non-deal” roadshow, investors say. The Mexican bread maker is not in urgent need of funds, though is working to get reduce debt to Ebitda to 2.0x this year, from 2.5x earlier in February, after the late 2008 acquisition of Weston Foods assets in the US pushed it above 4.0x. CFO Guillermo Quiroz told LatinFinance in March that liability management was a possibility in the international markets this year. Bank of America Merrill Lynch, Barclays and HSBC are managing the show. Moody’s this week changed the outlook on Bimbo’s Baa2 ratings to positive from stable, and upped its national-scale rating to Aa1 from Aa2.
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Inbursa Buys Chrysler Car Loan Portfolio
Mexican financial group Inbursa says it has acquired Chrysler’s car loan portfolio for MXP5.6bn ($435m) in an effort to strengthen its position in the retail consumer market. S&P analyst Alfredo Calvo says the deal will not have a major impact on Inbursa’s ratings. It also will not increase its share of the Mexican retail market much, as it will still remain under 2%, even though it will get about 60,000 new clients through the acquisition. As of March, Calvo says Inbursa’s retail portfolio amounted to about MXP6bn. Its total portfolio, focused mostly on the commercial segment, amounts to MXP167bn. S&P has a BBB rating with stable outlook on Inbursa.
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Advent Sells Scitum to Telmex
Global private equity firm Advent International has announced it has sold, together with minority investors, an 82% stake in Mexican IT security services provider Scitum, to Telmex for an undisclosed amount. Telmex has confirmed it acquired Scitum, but is not disclosing any more information regarding the deal. Advent originally invested in Scitum in December 2006. Since then, Advent says Scitum’s revenue nearly doubled, Ebitda grew almost threefold and Ebitda margins increased over 40%. Scitum and Advent executives did not return calls seeking comment.
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BAML Exits Santander Mexico
Santander is buying back from Bank of America Merrill Lynch (BAML) a 24.9% stake in Santander Mexico for $2.5bn cash. BAML paid approximately $1.6bn cash for the stake in late 2002 and said it had a book value of $2.7bn at the end of March. The transaction values the Santander Mexico unit at $10bn and the Spanish parent says Mexico’s contribution to group profit will increase by 2 percentage points, to 7%. The group made EUR8.9bn in profit last year. “This acquisition reinforces Santander’s commitment to Mexico, a country with a very positive outlook for growth, and furthers the geographic diversification of our group,” says Santander chairman Emilio Botin. Santander sees strong growth potential in Mexico owing to a low level of use of banking services. It claims to be the third financial group in Mexico by business volume, with 13% market share in loans ($16.16bn) and 14.8% in deposits ($18.55bn). Santander says that since the stake was sold to BAML, the value of the Mexican unit has risen 56%. BAML last month agreed to divest its stake in Brazil’s Itau, and there was speculation that it may look to monetize other investments in LatAm, including Santander Mexico. However, analysts said it would be less keen to part with the latter, owing to its relative size and importance for the US bank, which is relatively strong in Mexico. BAML got $3.9bn from the sale of the Brazil stake, about 11% less than the $4.4bn initially expected following a slump in the stock price, but a 37% gain over a 4-year investment period. The US bank needs to raise funds to repay TARP borrowing, having pledged to sell assets and produce a net gain of $3bn by June 30. When the deal was signed, BAML billed it as a way of drumming up business from the fast-growing Mexican-American population. The sale of its Mexico stake, which must be approved by the relevant regulators, is expected to be completed within 90 days.
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Moody’s Positive on Bimbo
Moody’s has improved the outlook of Mexican food company Bimbo, rated Baa2, to positive from stable. The agency cites Bimbo’s progress in deleveraging its balance sheet after acquiring US-based Weston Foods, where it also expects synergies. For the 12 months ended March 31, debt to Ebitda was 2.5x and Bimbo aims to reduce this to 2.0x, Moody’s says. However, Moody’s also notes challenging conditions in Bimbo’s key Mexican and US baked goods markets. Debt maturities in 2011 are minimal, at MXP714m, rising to MXP13.5bn in 2012, MXP5.4bn in 2013 and MXP7.7bn in 2014, says Moody’s, which expects Bimbo to refinance these on a timely basis in DCM or the bank market, as well as some free cash flow. Bimbo also maintains a $750m committed revolving credit facility which is undrawn and provides alternate liquidity, the agency adds.
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Investors Shun CMR Falabella Bonds
Colombia’s CMR Falabella, a credit services unit of Chilean retailer Falabella, has issued COP50.4bn ($25.3m) in local bonds, only about half the COP100.0bn it intended to issue, according to a banker on the deal. Total demand for the notes was just COP50.4bn. Investors apparently balked at the price, which was tighter than the underlying, owing to a Bancoldex guarantee that raised the notes to AAA. The issue was done in 2 tranches, with a COP36.7bn 3-year piece paying 3.9% over IPC and a COP13.7bn 5-year at 4.5% over IPC. “The market was pricing the notes as if they were rated AA+ and not AAA,” says the banker. The issuer is rated AA+. Correval managed the sale.
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Penoles Targets Next Week for Jumbo
Penoles is targeting June 17 for the sale of up to MXP7bn in bonds on Mexico’s domestic market, regulatory approval and market conditions permitting, say bankers managing it. The silver miner has the option to divide the issue into 10-year fixed-rate notes and 5-year notes paying a spread to the TIIE benchmark. BBVA Bancomer, HSBC and Santander are managing the sale, rated AA+ on a national scale. Proceeds will go towards refinancing debt and financing investment. In another highly anticipated AAA corporate transaction, Telefonica is heard aiming for the last week of June to place a MXP6bn 2014/2020 deal from its Mexican unit, also through BBVA, HSBC and Santander.