Merrill Lynch’s Latin America chairman Carlos Gutierrez has left the firm, according to Mexico-based bankers, and more departures look likely. The exit of such a widely respected veteran financier is a major LatAm loss for Merrill, which is heard under pressure to shrink its regional platform following the sale to Bank of America. “He retired,” says a Mexico-based source. “He has been around for over 20 years and he thought it was a good window of opportunity to take his package, given the whole environment and how things look going forward,” adds the banker. Gutierrez, head of Merrill’s Mexico operations for more than a decade, was promoted to chairman in early September, based in Mexico City. In that role, he was Merrill’s senior LatAm relationship manager, charged with expanding cross-border business to other parts of the world and boosting coverage of multinationals and top non-LatAm private clients doing business in the region. “Carlos is probably the most seasoned investment banker in Mexico,” says a DF-based former Merrill staffer. “I cannot believe what Bank of America is doing to this franchise. While I can certainly understand layoffs in the context of the general Wall Street turmoil, it is incredible that BofA decides to slice down one of its most profitable operations,” he adds. Francisco Hernandez, a director in charge of Mexican DCM, local and cross-border, also recently left the Mexico office. “We don’t comment on staff,” says a Merrill spokeswoman, when asked about the Gutierrez and Hernandez departures. The Mexico turnover follows last month’s exits of Juan Vogeler, MD and co-head of LatAm ECM based in New York and Ricardo Lanfranchi, MD in charge of Merrill’s Brazil-based equities brokerage unit, along with at least 6 other mid and junior level investment bankers in Sao Paulo. Amid severe pressure on BofA’s share price, more rounds of layoffs are expected at the firm globally, starting this month. Further LatAm exits are highly likely, both forced
Category: Regions
Fitch Lowers Posadas
Fitch has downgraded Grupo Posadas to BB minus from BB based on expectations of increased leverage amid continued depreciation of the MXP. The agency expects the Mexican hotel operator’s debt to Ebitda ratio to reach approximately 4.3x, as it looks to strengthen its liquidity position due to margin calls on derivative instruments. Further depreciation in the peso could result in an additional downgrade, Fitch says, in what it expects to be a challenging year for the hotel sector. The outlook remains negative.
Peru Cuts Rate by 25bp
Peru’s central bank has cut its monetary policy rate by 25bp to 6.25%, citing lower inflationary pressures. The bank says it expects inflation to continue falling. Merrill Lynch had correctly predicted the bank would make the quarter point reduction. “Increased evidence of slowing activity and global easing set the path for lower policy rates,” says the shop, adding that it expects a stronger cut at the March 5 meeting. Merrill expects 250bp of easing through 2009.
Vitro to Miss Local Payment, Slapped with US Suit
Vitro was not planning to make yesterday’s MXP150m interest payment on local bonds, in order to preserve cash to continue operations. The Mexican glassmaker was meanwhile hit with an $85m lawsuit in New York from Credit Suisse, which alleges non-payment on derivative contracts. Vitro says it is analyzing its options regarding the lawsuit, and intends to hold discussions with local bondholders about a restructuring. It is doing the same with dollar bondholders and derivative counterparties. Earlier this week, Vitro announced that it would miss $45m in interest payments on 2012 and 2017 dollar bonds. Blackstone is advising Vitro on the restructuring.
Correction:
A February 4 Daily Brief entitled “Mexican Truck Unit Revs up Local Issue” incorrectly states the size of a Coca-Cola Femsa 2010 bond issue. The correct amount is MXP2bn.
Bancolombia a Buy
Analysts at Colombia’s Bolsa y Renta have a put buy recommendation on Bancolombia shares after the bank’s 2008 profits soared by almost 30% over the 2007 period. Bolsa y Renta believes the bank’s stock price will reach COP16,800 per share by the end of 2009. The stock closed at COP12,820 on February 3. According to Colombia’s banking association, the bank has 19.1% of total deposits in the country, 21.8% of total net loans, 21.0% of total savings accounts, 22.1% of total checking accounts and 14.8% of total time deposits.
Colombian Utility Readies Local Tap
EMGESA, a Colombian unit of Spain’s Endesa, plans to sell COP180bn-265bn ($73m-$107m) in local bonds February 11, according to a report from brokerage Correval. The power provider plans to offer 5-year fixed-rate bonds, and 10- and 15-year notes linked to the IPC inflation index. The pricing will be determined through an auction process. Citi is managing the transaction.
Colombia Swap Hits COP3.71trn
Colombia’s government has swapped a total COP3.71trn ($1.5bn) in six series of local TES bonds maturing between 2009 and 2011 with three series of new bonds maturing 2012, 2014 and 2018, it says. Investors exchanged COP2.71trn in short-term debt through public offerings, and the government also swapping COP1trn worth of those same bonds held by state-owned companies. “Current fiscal strains are probably behind the government’s effort to move to a less front-loaded profile of debt maturities,” Citi says in a report, noting that this type of swap should become more frequent in the future and push the long end of the TES curve steeper.
Suitors Circle Air Jamaica
Air Jamaica, for which the Jamaican government is seeking buyers, has received interest from three suitors, says an IFC spokeswoman who declines to identify them. The IFC has been advising the government regarding its privatization program since March. “The privatization committee is in discussions with three potential partners from three different geographic regions,” the spokeswoman says, adding they are working toward reaching an agreement by the end of March.
Southern Copper Agrees to Buy Frontera
Grupo Mexico’s Southern Copper has agreed to acquire Frontera Copper for CAD0.65 per share or about CAD42m in cash, the target says. In early December, Invecture Group, a mining-sector focused fund that manages $600m and owns about 21% of Frontera, had offered CAD0.59 per share, but Frontera balked, calling the move opportunistic. The offer is conditional on the deposit of at least 66.7% of the outstanding Frontera shares and regulatory approvals. The deal is expected to close no later than February 13. Both mining companies operate in Mexico. Copper trades at about $1.52 per pound, down from highs of over $4.00 per pound in June. Frontera has hired RBC as its exclusive financial advisor, while UBS is advising Southern Copper.