Fitch has assigned an A minus rating to a $150m MT100 from Peru’s Banco de Credito del Peru. The CCR Inc MT-100 Payment Rights Master Trust’s (CCR) 2008-B notes pay a floating coupon and come from a DPR program with approximately $1bn outstanding. The notes are backed by the collections generated from future and existing USD denominated DPRs originated by BCP. Coverage levels for the program are expected to be approximately 90x maximum quarterly debt service based on the recent volume of flows. “Fitch has stressed these coverage levels and believes that BCP’s current and future DPR business is adequate to support the rating of these future flow notes,” says the agency. BCP is the largest bank in Peru in terms of total assets, loans, deposits, and branch network. As of September, it had total assets of $20.8bn, or about 39% of the total banking system’s assets. Fitch rates BCP BBB minus with a positive outlook.
Category: Regions
WB Approves $100m Loan for Panama
The World Bank has approved a $100m loan for Panama. The fixed-term loan is repayable in 25 years and has a grace period of 2 years. The transaction “will support institutional reform and key policies for lasting and equitable growth in Panama, such as fiscal discipline consolidation, accountability, and the modernization of public financial management,” says Laura Frigenti, World Bank director for Central America.
Scotia to Invest in Peru
Scotiabank says it will seek approval from its board during its next shareholder meeting to invest about $100m in Peru for 2009 to strengthen its operations in the country. A source at the bank says the funds will come from dividends that will not be distributed to shareholders. He adds that specific investments have not been agreed upon yet, but that a part of the funds will be used to maintain a healthy level of reserves.
Remittances Grow in DomRep and Guatemala
Remittances to DomRep are expected to rise 5.0% in 2008 to almost $3.2bn. Remittances to Guatemala, meanwhile, are expected to increase slightly to $4.28bn in 2008 from $4.13bn in 2007, according to JPMorgan. The trend is expected to slow down in 2009, says the shop. Remittances to DomRep are expected to remain flat in 2009 and Guatemala’s should drop to $4.06bn, as the international financial crisis takes a toll on both countries.
Moody’s Sees Guatemala Deterioration
Moody’s has cut the outlook on Guatemala’s ratings to stable from positive. The affected ratings are the Ba2 foreign currency rating, Ba1 country ceiling for foreign currency bonds and Ba3 country ceilings for foreign currency deposits. The cut reflects a relative worsening of Guatemala’s credit metrics compared to similarly rated countries, as well as the impact of the global crisis, which will make credit improvements more difficult. “Despite recent above-trend growth, Guatemala is growing slower than the median for Ba sovereigns; Guatemala is getting poorer and smaller compared to other Ba countries,” says Moody’s vice president Gabriel Torres. “Ten years ago Guatemala’s per capita GDP was 82% of Ba rated nations. Today that has dropped to 58% because of the lower relative growth,” he adds.
Citi Chops Mexico Equity, Tips LatAm Bounce
Citi is cutting Mexico equity to underweight from neutral and adding to an overweight in Chile, while also projecting dollar-adjusted returns of 41% in LatAm stocks next year. “All of these returns should be expected after a Q1 pullback in regional markets,” says the shop, which expects end-2009 market targets of 55,000 on the Bovespa, the Mexican bolsa at 24,000, Chile’s IPSA at 2,900, Colombian IGBC at 10,500 and Peru’s General ending at 9,500. Citi anticipates an early-2009 new relapse of regional markets towards the lower end of current trading range as the Q4 report card comes in, dented by a very weak global economy and poor corporate releases. “We expect a strong upside breakout of equity markets from April/May on, as investors anticipate the bottoming out of the US and global economies,” says the shop. Its economists expect global GDP to rise by just 0.5% in 2009, including a 1.5% contraction in the US. EM should grow by 3.8% in 2009, accounting for over 100% of global growth, while it expects LatAm to slow to 1.6% expansion in 2009, with Brazil at 2.2% and Mexico declining by 0.2%. Citi is overweight Brazil, neutral in Colombia and underweight Peru and Argentina. “We stay largely defensive in sector terms for the near term. It is too early for the full “recovery trade”,” adds the shop.
Banco General Perp Sale Takes Off
Panama’s Banco General has sold a $10m piece out of $250m in dollar-denominated 6.5% coupon perpetual bonds in the local market, says a source at the bank. The perps are callable after 5 years but maintain their 6.5% coupon permanently. The deal is the first perpetual bond done by Banco General in any market. BG Investment, the bank’s capital markets unit, is managing the sale.
Mexico Dazzles With Surgical Strike
Mexico has cracked open the international bond markets for EM issuers with a tightly priced $2bn 10-year benchmark that takes out much of 2009 funding needs. The surprise surgical strike on markets assumed to be firmly shut for LatAm breathes life into fixed income and could spur fresh high grade activity in early 2009. The Global 5.950% of 2019 priced at 99.784 to yield 5.980%, or 390bp over UST and was heard trading at 100.25 (385bp) late Thursday. Guidance was 400bp area and the deal was executed at just 40bp above the 2017 – according to the leads – versus expectations of at least a 50bp concession taking into account recent US high grade pricing. Bankers away from the Baa1/BBB+ deal had expected the first LatAm issuers back to pay 60bp-100bp, but UMS was helped by recent firming in US fixed income and a relatively solid reputation. “The market was really at its peak and we also saw that in the sovereign space,” says Elizabeth Dennis, head of LatAm syndicate at Morgan Stanley, joint lead on the deal with Goldman Sachs. “It’s a great signal, everyone has been waiting for the EM market to reopen.” Mexico also benefits from scarcity value. It was last in the market in January with a new $1.5bn 2040 bond priced at 99.930 and 6.050% coupon to yield 6.055%. JPMorgan predicted in October that UMS would not issue at all in 2009, when it will make coupon and amortization payments of just over $8bn. Buyers of Thursday’s deal were 60% from the US, 35% LatAm (mainly Mexico) and 5% Europe. The bulk was dedicated EM, with some cross-over high grade, according to Dennis, who adds that the transaction covers most of Mexico’s 2009 funding requirements. There is a make whole call at UST+50bp and maturity is March 19 2019. Bankers at rival shops tip their hats to the first major bond issuance in months. “They should be extremely happy,” says a senior DCM official. “It shows the market is hungry for sovereigns,” adds the banker, saying that the transaction bodes well for LatAm volu
Colombia to Ease Rates in 1Q09
Colombia’s central bank is likely to keep the monetary policy rate unchanged at 10% on Friday, although some shops believe a cut is already due. Credit Suisse LatAm economist Carola Sandy says she expects no change in rates at the upcoming meeting as a majority of central bank board members “think that inflation and inflation expectations are still too high to start easing.” Goldman Sachs senior LatAm economist Alberto Ramos also expects no change, but adds that “there is a 45% probability of a 25bp cut” Friday. Meanwhile, Barclays economist Jimena Zuniga expects a 25bp cut Friday. She says some central bank board members have been calling for a reduction, as inflation expectations have improved. “Inflation is expected to drop to 4.7% by December 2009,” she says. Most economists agree that the rate will be eased in 2009. “By August 2009, we expect the rate to have been eased by 200bp,” says Zuniga. Ramos and Sandy also expect cuts beginning in Q1.
Gigante Sells Radio Shack Stake
Grupo Gigante has sold its stake in Radio Shack to Tandy for MXP563.2m after the two did not reach an agreement on how to expand the chain in LatAm. Proceeds from the sale will likely be used to finance future acquisitions by Grupo Gigante. In a letter to the BMV, the company says proceeds will “complement and reinforce the consolidation and growth strategy.” Spokesmen from the companies could not say how the deal is being financed. According to Actinver analyst Marisol Huerta, Radio Shack contributed to 14% of Gigante’s revenue in 2007. She also says Gigante has $400m in cash, which allows the company to look for acquisition opportunities. Gigante recently said it would invest up to $50m to expand Office Depot de Mexico – in which it holds a 50% stake – to Colombia, possibly through acquisitions.