Despite the global economic slowdown, JPMorgan says Costa Rica’s tourism industry is expected to grow by 7.5% in 2008 versus the previous year and Guatemala is expected to post a better-than-expected fiscal deficit of 1.2% of GDP in 2008. Costa Rica’s tourism chamber, says the shop, expects 2.1m visitors by the end of this year, which could translate into more than $2bn in revenues. In 2007, almost 2m tourists generated more than $1.9bn, the chamber says. As for Guatemala, JPMorgan says that although tax revenues declined by 8.9% 1-year average to $310m in November, the year-to-date figures show a 6.3% increase from the first 11 months of 2007. Central American credits tend to be defensive in bear markets, outperforming more liquid higher beta sovereigns on the downside.
Category: Regions
Altra Seen Growing PE Fund
Private equity fund manager Altra Investments has announced the partial closing of its Altra FCP I fund, which has secured commitments of $75m from Colombian investors. Altra says it expects the total size of the fund to reach $110m over the next quarter as it secures commitments from international participants. Altra FCP I will target investment opportunities in established companies with proven business models, sales above $20m, and operations in the Andean region and Central America, particularly in Colombia and Peru. The firm operates from offices in Bogota and Lima.
Homex, Estacio Name New CFOs
Homex has named Carlos Moctezuma as CFO, replacing Alan Castellanos who stepped to pursue other opportunities. Moctezuma has been with the Mexican homebuilder for 5 years, most recently as director of strategic planning. Homex also named Hector Cuen as Treasurer. Cuen is experienced in debt and capital markets and other areas of investment and treasury operations, Homex says. Elsewhere, Brazilian education management company Estacio has named Eduardo Alcalay CEO, following the resignation of Joao Carlos de Castro Rosas for personal reasons. Following a BRL447m IPO in 2007, Estacio sold a 20% stake to GP Investments for BRL259m in May.
Telmex, EPM Potential Bidders for ETB
Telmex, Telefonica and EPM, majority owned by Empresas Publicas de Medellin, are possible bidders for Bogota-based telecom company ETB, say two Colombian analysts from different firms who ask not to be identified. ETB, which in late October hired Santander Investments to explore strategic alternatives, is more likely to sell a stake rather than the company as a whole, believes one analyst. By acquiring ETB, says the other analyst, the three potential bidders would greatly expand their penetration in Colombian broadband, as ETB has a 32% share of that market. Telefonica and EPM each have a 19% share, while Telmex has 14%. Juan Carlos Alvarez, MD at Santander, tells LatinFinance that although strategic alternatives for ETB are still being evaluated and that no recommendation has been made to ETB yet, a sale of a stake or of the company as a whole is being considered. “We will know in about 3 months if that is the best alternative,” he adds.
Isagen Floats Ambitious Hydro RFP
Colombian power generator Isagen is seeking bank participation for a $1.3bn syndicated loan to help finance an 800MW hydroelectric project at the Sogamoso river complex in the northern central part of the country. The Medellin-based state-owned entity is looking to hire a financial advisor for the deal. In an RFP issued over a week ago, the company apparently asked lenders to consider committing to a 2-stage financing: an initial $600m corporate holdco loan to allow it to begin construction while debt markets remain expensive and choppy, and, some 2 years down the road, a second $700m non-recourse project financing. The company requested suggestions on fees for both deals, which some bankers have found peculiar, given the difficulty loan desks are having in pricing deals even in the short term. “Their timing isn’t particularly good,” says a banker whose shop was invited to pitch. “They’re looking for over $1bn at a time when everyone is closed for business,” he adds, noting Isagen extended the deadline for proposals until December 15. Isagen hired Bancolombia earlier this year to be local advisor on the deal, but the shop has apparently not been involved in the process to choose banks for the cross border loan. International lenders were asked to pitch directly to the company. Bancolombia bankers and Isagen officials did not return calls seeking comment.
Citi Loses LatAm I-Bank Co-Head
Carlos Vara, co-head of Citi’s LatAm investment banking unit, has left the firm, say people familiar with the matter. Friday was apparently the last day for the Mexico-based executive. The reason for his departure is not clear, though some speculate the choice to leave was voluntary. The investment banking business that Vara helped run covers advisory, M&A and the equity product on occasion. Ricardo Lacerda, Vara’s former co-head based in Sao Paulo, remains at the firm, say company officials, though it is not clear who will replace Vara to run Mexico. A Citi spokeswoman declines to comment.
Norsemont Hires Paradigm Capital as Advisor
Norsemont Mining has notified Peru’s Conasev that it has hired Paradigm Capital to act as its exclusive financial advisor. Canada-based Paradigm’s hiring comes shortly after the miner received unsolicited expressions from third parties interested in buying it. Andrew Partington, a partner at Paradigm, tells LatinFinance that a timeframe has not yet been set as to when deal books will go out. Norsemont had already hired Fraser Milner Casgrain as legal counsel. Norsemont, which is based in Canada and operates the Constancia project in southern Peru, has a market cap of CAD103m.
BMSC Frets Over Political Risk
Banco Mercantil Santa Cruz (BMSC), Bolivia’s biggest bank, says it is concerned about the local political environment in the medium to long term, including the threat of nationalization. “If there is a risk, it’s very far down the line. [The president] has got a lot of nationalizations to go through before us,” Darko Zuazo Batchelder, BMSC’s vice president, tells LatinFinance. He adds that he does not expect the bank to become a target of the government in 2009 or 2010. “We’ve got time to prepare . . . we just have to manage our risk,” adds the banker. BMSC is worried about increased economic instability undermining president Morales and forcing him to take more drastic measures to fortify his popularity. “That’s where we’re worried. Right now he’s popular, he doesn’t need to attack,” says Zuazo. “We do believe that times are going to get tougher for our president,” he adds. The Bolivian government shocked investors in May with the seizure of four energy companies and a telecom, amid a wider nationalization spree.
Banco Industrial Outlook Seen Worsening
Fitch has cut to stable from positive the outlook on the BB ratings of Banco Industrial amid a worsening environment in capital markets that complicates capital enhancement alternatives. Guatemala’s biggest bank had been trying to do an IPO earlier this year, but opted instead for a $35m 2068 Tier-1 hybrid paying 9% for 10 years and Libor plus 600bp thereafter. The April offering through Credit Suisse was placed only with Guatemalan investors and fell well short of a $100 million target size. The prior positive outlook from Fitch reflected perception that capital adequacy would improve following certain strategies that the management has pursued. “Weakening economic prospects are likely to impact Industrial’s impairment loan ratio, its provisions and overall performance, a confluence of factors that is consistent with Industrial’s current ratings, hence Fitch’s outlook revision to stable,” says the agency. It notes that Industrial maintains a robust franchise in Guatemala, low level of loan delinquency, improving efficiency and profitability, and adequate funding and liquidity. However, it also has a tight capital position following ample organic and acquisition-driven growth over the past two years, limited and declining loan loss reserves and modest revenue diversification. If Industrial hits difficulties, Fitch believes the government of Guatemala would have a vested interest in supporting it, given ample deposit market share.
Oil Hedge, Infrastructure Boost Mexico
Put options to sell oil at $70/barrel over the next few years and more than MXP100bn in the budget for infrastructure projects should allow Mexico to maintain a constant fiscal policy in 2009, says finance undersecretary Alejandro Werner. “We will be able to implement the 2009 budget without any problem,” the official tells investors gathered at an EMTA event in New York, despite a forecast of 1.8% for 2009 economic growth that could trend toward the downside. Werner says the hedge and about MXP96bn in 3 oil stabilization funds will allow the government to adopt strong countercyclical fiscal policy for more than the next 12 months. He also expects the government’s infrastructure agenda – including MXP35bn in toll road concessions, MXP30bn in suburban train projects and the MXP50bn+ Punta Colonet port project – to stimulate growth. Funds from the MXP270bn Fonadin infrastructure fund and development bank Banobras can fill the void left by private sector lenders, Werner says.