The impact of the credit crisis is a theme for all LatAm banking systems, and in Ecuador there is the added question of political volatility.
Category: Regions
Posted inMagazine
Best Bank Peru: Quality Counts
The banking race in Peru is a close one, and the global credit crisis appears to have done little to separate the two largest players, BBVA Continental and Banco de Credito del Peru. Backed by its parent¹s powerful network and back-office support, Continental¹s focus on profitability above size has served it well.
Posted inMagazine
Best Bank Bolivia: Still on Top
Banks operating in the smaller LatAm economies have hunkered down during the crisis and the pecking order has remained largely the same as a result. In Bolivia, the dominant bank remains Banco Mercantil Santa Cruz (BMSC).
Posted inDaily Brief
Local Corporate Debt Still Risky
Local currency-denominated corporate bonds remain unattractive for some EM debt investors, despite a strong draw to government issued local debt in many LatAm and Asian countries. Dave Leduc, senior PM for global fixed income at Standish, believes local currency government bonds offer attractive returns, pointing to an average annual yield of 8% for the asset class and between 10%-12% in places like Brazil. They are one of the best ways to play EM countries’ recently-earned solid fundamentals and robust economic growth outlook, Leduc notes, speaking in New York Thursday. He points to Brazil and Russia as but 2 examples. But when it comes to buying local debt issued by companies, the manager believes investors are better off playing in EM equities. “We’re not comfortable with the level of disclosure [in many local corporate bond issuances,]” says Leduc. “The premiums don’t offer sufficient compensation for the risk,” he adds, noting a combination of EM equities and sovereign local debt is a good mix for investors. That said, large liquid global issues by EM corporates are still worth considering, he says, pointing to a recent Petrobras 30-year which his fund participated in.
Posted inDaily Brief
Chile Retailer Displays COP Bonds
Falabella’s CMR Falabella credit services unit is preparing to sell up to COP200bn ($100m) in domestic bonds, the first in the Colombian market for the Chilean retailer or any of its subsidiaries. The final terms have not been set, but Falabella can choose between maturities ranging from 2011-2016, and can issue at a fixed rate or at rates linked to inflation or the DTF benchmark, according to a company official. The timing also remains to be set, but should be before the end of the year, the official says. The issue rated AAA on a national scale counts on a guarantee from Bancoldex. IMTrust structured the notes, and Bancolombia, Correval, Corredores Asociados, Interbolsa and Proyectar are handling the sale.
Posted inDaily Brief
Mexichem Pricing 2019 at 8.5% Area
Mexichem has issued 8.5% area yield guidance on its new 2019 bond, according to investors, expected to price as soon as today. The Mexican chemicals maker is set to raise $350m, to fund an undisclosed future acquisition. Bank of America-Merrill Lynch is leading the Ba1/BBB minus deal.
Posted inDaily Brief
BMG Targets 10.25% on Bond Issue
Banco BMG has put out 10.25%-area yield guidance for its new $300m 10-year Tier-2 bond, according to investors. The US, European and Asian roadshow was set to wrap up today, with pricing expected Thursday. Morgan Stanley, Santander, BTG Pactual and UBS are managing the sale, rated Ba3. BMG is hoping to follow well-subscribed subordinated offers from larger compatriots Bradesco and Banco do Brasil. The payroll credit specialist is an experienced senior note issuer in the cross-border market, having last done a $200m 7.25% of 2011 bond in May 2008 through BCP and UBS.
Posted inDaily Brief
Colombian Retailer Plans Share Sale
Colombia’s Almacenes Exito plans to raise about COP435bn ($223m) from the sale of 30m new shares. The retailer plans to aims the shares to existing holders at COP14,500 each within 15 business days. Proceeds are destined for expansion, including helping to pay for the 22.5% it does not already own in retailer Carulla Vivero, a deal announced Monday and expected to be completed early next year. Corredores Asociados, Correval, Interbolsa, Serfinco and Bancolombia will manage the sale. Exito shares closed Tuesday at COP16,000.
Posted inDaily Brief
PE Group Takes Javer Control
Southern Cross, Evercore and Mexico Capital Partners have bought a 60% stake in Servicios Corporativos Javer, the Mexican low and middle-income homebuilder. The buyer declines to state the value of the transaction, which it says does not involve any change to management, operating team or strategy. Nor does it involve any modification in Javer’s cash balance or financial position. Roberto Russildi and Eugenio Garza, CEO and CFO respectively, remain in place, while the company says that the rest of the senior management team has signed long-term contracts with incentives tied to performance. Company founder Salomon Marcuschamer will serve as Javer’s honorary chairman and the board will also include Southern Cross president Ricardo Rodriguez as chairman, and his colleagues Cesar Perez Barnes and Sebastian Villa, as well as Pedro Aspe and Alfredo Castellanos from Evercore. “Our investment in Javer relies on solid fundamentals, in one of the most relevant sectors of the country’s economic activity,” says Aspe. “The market knowledge and business expertise of Javer’s executive management have allowed it to become a leader in the sector and is a testament of the company’s competitive position,” he adds. Javer plans to build more than 17,500 homes in 2009 and has land reserves in excess of 100,000 units. According to Javer, homebuilding in Mexico is approximately a $20bn industry with annual demand for homes in excess of 800,000 units. Closing of the transaction, expected in November, will require approval from Mexican regulatory authorities. Javer reported Q1 net revenue of MXP1.1bn, up 53.3% and gross profit of MXP317.2m, up 19.0%.
Posted inDaily Brief
Mexichem Talk Bond at 8.5%
Mexichem is whispering 8.5% yield on its new 2019 bond, according to investors, expected to price today or Wednesday. The Mexican chemicals maker is targeting $350m, to fund an undisclosed future acquisition. Bank of America-Merrill Lynch is leading the Ba1/BBB minus deal. RBS views the deal as essentially a housing play, it says in a note, as about 70% of Mexichem’s net sales come from the homebuilding and construction industries. “We like this bond at this level, however the upside appears to be limited,” the shop says. It says the talk puts the bond about 20bp inside Homex’s 2015 (8.7% adjusted for duration) which it says is not appropriate compensation.