As expected, Mexico’s central bank cut its monetary policy rate by 25bp to 4.5%, but analysts are divided on the need for further loosening. The bank says it is pausing the easing cycle and that future actions will be in line with the balance of risks for activity and inflation, with the latter targeting 3.0% by the end of 2010. Goldman Sachs believes that choosing to pause is better than concluding the easing cycle. “In our opinion, the recession will prove deeper than expected, therefore inflation is likely to continue to decline toward 4% by end 2009, thus enabling Banxico to resume modest easing in 3Q2009,” Goldman says. In Credit Suisse’s view, “additional rate cuts would materialize only if 12-month inflation came in below the low end of the central bank’s inflation forecasts for upcoming quarters (4.75% for 3Q and 4.00% for 4Q), which we view as improbable.”
Category: Regions
RBTT President Resigns
Catherine Kumar, president and country head for Trinidad & Tobago’s RBTT Bank has resigned effective September 10, a company spokesman tells LatinFinance. He adds that her last day at the bank will be in late August. In a statement, Kumar says she is leaving “for personal reasons.” She has led the bank’s operations for 3 years. Before joining RBTT she was the inspector of financial institutions at the central bank of Trinidad & Tobago.
Mexican Petrochem Aims for Follow-On
Mexichem plans to sell up to MXP153.6m new shares to pay down debt and obtain working capital. The Mexican petrochemicals maker’s shareholders will vote on the sale August 3. If the maximum amount were sold at Friday’s closing price of MXP16.13, the transaction would raise MXP2.47bn.
Famsa Holders OK Capital Raise
Shareholders in Mexico’s Grupo Famsa approved a capital increase of MXP1.2bn at a Friday meeting. In a filing, Famsa says it will issue 109.1m new class A common shares at MXP11 each. The controlling shareholder has agreed to buy half of the new shares, while the other half will first be offered to the other existing shareholders, the company said. Famsa said earlier this month that proceeds of the capital increase will be used for working capital and to reduce debt. The A shares closed at MXP15.36 Friday.
Ideal Plots Toll Road ABS Sequel
Ideal has filed for a new securitization of toll road concessions, in a follow-up to a MXP7.1bn transaction it brought last year. The Mexican builder and concessionaire controlled by Carlos Slim is preparing a less ambitious deal of up to MXP2.4bn through a combination of UDI and floating-rate MXP-denominated bonds due 2019, the second piece of a MXP50bn program. A roadshow should start as soon as this week, says an official familiar with the offer. As in last year’s successful transaction, the bonds will be backed by revenues from the Champa-La Venta, Libramiento de la Ciudad de Toluca, Tijuana-Mexicali and Tepic-Villa Union toll roads. The trust holding the concessions represented an innovation for Mexico in that new roads may be added to it, though none have yet. Last year’s leads Inbursa and Credit Suisse are back in the driving seat and a deal is expected as soon as late August. A recent MXP2.2bn 2-year deal from Cemex has offered hope that Mexican investors may be ready again for ABS. However, Ideal is more conservative on tenor this time, and it is scaling back the tenor to 10 years and leaving tranche allocations to be decided on the day of sale. Last year, it sold MXP1.5bn in 2015 notes at TIIE plus 28bp, MXP1.3bn in 2036s at 10.50% fixed, and MXP4.3bn-equivalent in 2036 UDI-denominated bonds at 5.69%.
Megacable Names New CFO
Mexico cable operator Megacable says it named Alonso Andrade as its new CFO and administrative officer after Cesar Lau resigned from the post effective July 30 following 12 years with the company. Lau, who worked on the company’s IPO and several acquisitions in recent years, will pursue other projects, says Megacable. Andrade, the new CFO, was formerly finance chief at Perot Systems Services of Mexico for more than 2 years. He had also held positions at Servicios Financieros Integrales, Grupo Mezgo, and Carterpillar Financial, among other institutions. Alonso Andrade has an accounting degree from Universidad La Salle and earned an MBA from Instituto Tecnologico y de Estudios Superiores de Monterrey, and has an advanced management degree from Instituto Panamericano de Alta Direccion de Empresas.
EPM Gets Split Rating on Debut
Moody’s has assigned EPM’s new $500m+ 2019 bond a Baa3 investment-grade rating. The mark follows the BB+ given the Colombian utility by Fitch. EPM is roadshowing until Monday, and is expected to price the bond, its first in the dollar markets, next week. Investors say they expect a yield at a spread slightly back of the UST+410bp, about 110bp wide of the sovereign, which compatriot Ecopetrol got Thursday for its new 2019. The hefty order book for Ecopetrol and general bullishness about Colombia should translate into a decent turnout for EPM, depending on terms. JPMorgan and Bank of America-Merrill Lynch are managing the EPM transaction.
Ecopetrol Spread Lures Avid Buyers
Following the conclusion of a US and European roadshow Wednesday, Ecopetrol was heard receiving more than $4.0bn in orders for its new $1.5bn 2019 bond, for which it has circulated guidance of 425bp area over US treasuries. The deal should price today, and 425bp would mean a yield of 7.85%, based on treasury prices late Wednesday. Investors looking at the deal expect some tightening, however, as 425bp is seen as a bit cheap to Colombia’s curve. Colombia’s sovereign 2019 traded at around UST+300bp, while the 2019s of quasi-sovereign oil producers Petrobras and Pemex each traded 90bp-100bp wide to their respective sovereign comparables. Such a comparison among the oil producers is difficult, investors and DCM bankers away from the deal note, as Petrobras and Pemex are rated higher than Baa2/BB+ Ecopetrol, and the Colombian government-controlled oil producer has no outstanding debt. Barclays and JPMorgan are managing the transaction. Ecopetrol, which has also secured $1bn in loans and plans domestic bonds this year, is expected to become a regular cross-border bond issuer to fund a $58bn 2008-2015 investment plan.
WB Working on Loans for DR
The World Bank is evaluating extending some $300m in loans to the Dominican Republic later this year, says Yvonne Tsikata, the multilateral’s director for the Caribbean. One of the loans, for $150m, will be a new facility to support the social sector. The second, for $150m, will support the government budget. The board of the WB still has to evaluate these loans, Tsikata adds. The WB in April approved a $27.5m loan to the country to improve water and sanitation in Puerto Plata. The line has a rate based on Libor, a 30-year repayment period and 5-year grace period.
Femsa Domestic Jumbo On Ice
A domestic bond issue of up to MXP6bn from Femsa is expected to take place in the final week of the month, according to bankers managing the transaction. The issuer, originally considering to tap this week following a June roadshow, is now heard waiting until after Q2 numbers are released July 28. BBVA and Santander are managing the sale, rated AAA on a national scale. Precise terms will be set on the day of the sale, with the beverage company able to pick from a floating tranche, fixed-rate pesos and a fixed-rate piece denominated in UDIs, each up to 7 years. This week, two 2011 floating rate transactions are expected to price tomorrow in Mexico’s domestic market. Cemex is expected to price its MXP2.2bn accounts receivable securitization through Ixe, and Grupo Elektra is set to sell up to MXP1.0bn in bonds via Inbursa.