Peru’s finance minister Luis Valdivieso has resigned, according to Peruvian media and wire reports, with former finance minister Jose Luis Carranza sworn in late Monday as his replacement. No reasons for the departure had been immediately reported, and finance ministry officials were not immediately available for comment. Valdivieso, a former IMF economist, held the post since July, replacing Carranza, who resigned after 2 years for personal reasons. Carranza’s first go-around as finance minister was marked by a breakthrough $1.5bn 6.9% 30-year PES-denominated global bond in July 2007 and Peru’s first promotion to investment grade, from Fitch in April 2008. Valdivieso had been talking up a possible dollar-denominated bond issue in recent weeks, following meetings with international investors in December and January. Both Fitch and S&P have Peru at BBB minus, with Moody’s one notch below.
Category: Regions
Banobras Weighs Fundraising, In No Hurry
Infrequent quasi-sovereign Mexican issuer Banobras may be looking to tap capital markets as demand for its loans rises. “Eventually we would have to. The bank under these circumstances – according to the demand and financial program we have – will need to access the markets eventually for funding,” Alonso Garcia Tames, director of infrastructure development bank Banobras, tells LatinFinance. He adds that tenor, size and whether a deal would be local or international have not yet been determined. Banobras was last in the local market in November 2005 with a MXP2bn 5-year priced at par to yield 8.68%. It has not been in the international market since 1996. In general, Banobras is drawing much more demand from local borrowers seeking alternatives to choppy and cautious peso capital markets. “We are again being much more looked to. Many people are only finding funding through the development banks,” says Garcia. Banobras also expects more demand for its new guarantee product, following the success of last year’s MXP27bn refinance for State of Mexico.
Lazard Reported Advising Ecuador Buyback
Ecuador has hired Lazard as financial advisor for its plan to buy back global 2012 and 2030 bonds, according to remarks from President Rafael Correa cited in Ecuadorian newspapers. The government plans to announce the details of the repurchase – expected at a discount of at least 70% – this month. Ecuador defaulted on the two issues, after a special government committee claimed they are illegal and illegitimate. Last week Ecuador said it would continue to make payments on its 2015 global bonds. A Lazard spokesman declines to comment.
Fitch Affirms Peru Rating
Fitch has affirmed Peru’s BBB minus debt rating, citing a solid macroeconomic framework and ability to withstand the current economic downturn. The outlook is stable. The ratings notice is the latest in a long line of teases suggesting a new debt issue is forthcoming. The issuer wrapped up meetings with investors this month, with finance minister Luis Valdivieso stating recently that January looks like a good time for a new issue and that there is demand for at least $600m. Goldman Sachs and JPMorgan handled Peru’s investor meetings.
Ecuador 2015 Bond Further Junked
S&P has downgraded Ecuador’s 2015 global bond to D from C. “The D rating reflects the trustee’s inability to disburse to bondholders the scheduled $30.5m coupon due on the bond at the end of the 30-day grace period, which was January 15, 2009,” notes S&P. Ecuador said last week it would honor its coupon payment on the 2015s, which it did not consider to part of the batch of so-called illegal debt. But the fact that it missed the period to meet this payment has led S&P to cut the bond to D.
Brazil, Colombia Seen Cutting Rates
Credit Suisse expects Colombia’s central bank to cut interest rates by at least 25bp on January 30 as market expectations for inflation in 2009 have improved. But it says that if indicators released over the next two weeks point to sharp deceleration of activity in late Q4, the central bank may cut its reference interest rate by 50bp. The median expectation for end-2009 headline inflation among Colombian and foreign analysts, says the shop, declined to 5.20% from 5.42%. UBS Pactual meanwhile expects Brazil, whose central bank meets next week, to cut its Selic rate by 50bps, although a 75bp cut is also possible. Barclays expects Brazil to cut by 75bp as it believes the economy will continue contracting and GDP growth will fall below 1% in 2009, down from its previous forecast of 1.9%.
Gissa to Change CFO
Mexico’s Grupo Industrial Saltillo has named Jose Antonio Lopez CFO effective Monday. He replaces Arturo D’Acosta, who agreed to step down through “mutual consent.” Lopez comes from the company’s own finance group. The diversified industrial group that makes auto parts, water heaters ceramic tiles and other products revealed last year that faces nearly $150m in counterparty claims on derivatives contracts that it plans to contest. Gissa last month hired external advisers to determine the scope of its financial obligations and its payment capacity, which it plans to reveal during the second half of January.
Peru Reportedly Sees Window for Bonds
Peru’s government finds January to be an opportune moment for a bond sale, its Finance Minister Luis Valdivieso told a news conference Thursday, according to wire reports. The government is weighing the “liquid” investor books at the moment against financing costs, Valdivieso says, and is very close to making a decision regarding an issue. He adds that Peru does not need the cash, but the sovereign wants to take advantage of current market conditions. After meeting investors on several continents in December and January, the sovereign is expected to issue $600m-$1bn in new bonds, having stated a preference for a 30-year issue. New York DCM sources tell LatinFinance that a 10-year would be much more doable, and Peru might be hesitant following last week’s $1bn Brazil 10-year offering which, though successful, highlights difficulties with price discovery. Peru registered a $5bn shelf with the SEC on Monday. JPMorgan and Goldman Sachs managed Peru’s “non-deal” roadshow.
Citi Grip on Banamex Weakens
Citi would rather not part with crown jewel Banamex, but the latest crisis may force its hand. Relatively, LatAm looks good versus the US and Mexico plays into Citi’s dreams of being the universal bank with geographic diversity and a lead position in higher growth markets. But Citi stock ended at $3.83 Thursday, down 15% on the day and more than 85% weaker year-on-year as some investors feared it was going the way of Lehman. The sale of Smith Barney proves Citi now has to part with erstwhile sacred cows, but the biggest challenge is finding a buyer with the $10bn-$20bn in cash that M&A experts say Banamex is worth. “The thinking is still to try to keep the Latin America banking franchise intact,” says Joseph Scott, banking analyst at Fitch. “That could change, it depends on the magnitude of the losses and if their backs are really against the wall then they might have to reconsider, say 3 or 6 months down the road,” he adds. There are very few possible buyers for Banamex, among them HSBC, Santander and JPMorgan. The latter just unveiled a 76% slump in Q4 profit, the Spanish bank is suffering Madoff exposure and HSBC is unlikely to spend 10%-20% of its net worth in a country where it already has thousands of branches. “I don’t think even Mexican captains of industry could put together that much money right now. Not without financing and you couldn’t get financing for a bank,” says a veteran LatAm banker. Some speculate that Itau or Bradesco could make a bid, but this also seems doubtful. “Really it’s tough to find buyers that would pay up for anything right now,” says Scott. Citi’s LatAm head Manuel Medina-Mora told LatinFinance in December that the region was essential to the global whole and that it would not be downsized. He did not answer requests for comment this week. Even if Citi keeps the region as is, there are nagging doubts about performance. “Earnings contribution in nominal terms is most likely to go down because they are facing more asset quality pressu
Government Doubtful on Mexico Megaport
Mexico’s government expects to postpone construction of its planned Punta Colonet port on the Pacific Coast, the transport ministry says in a presentation posted on its website. The delay may be indefinite as interested bidders would likely struggle to finance the $5bn project. Transportation minister Luis Tellez says there is still interest in the port, but it is a question of timing, according to wire reports. The ministry is working with Citi and another US advisor to see if it is still possible. The port in northern Baja California was to feature an airport and rail links to the southwestern US and was slated as the single biggest project in president Felipe Calderon’s infrastructure agenda. Calderon launched a call for bids in August with much fanfare, and Mexico hoped to receive bids by January. The government still plans to proceed with other auctions this year, including a second Farac toll package, for which bids are due at the end of February.