America Movil’s full draw on $2bn in bank credit facilities in Q3 and decision to use cash to repurchase MXP17.4bn in shares have weekend its liquidity position, says Moody’s, which cut the outlook on its A3 rating to stable from positive. The move will make it more challenging for the Mexican mobile phone operator to cover its MXP20bn commercial paper programs, of which it now has MXP6.5bn outstanding. Moody’s also revised expectations regarding America Movil’s “ability to increase margins and improve credit metrics in 2009, due to the likely impact of a more adverse economic environment on its pre-paid subscriber base,” it says.
Category: Regions
Posted inDaily Brief
Bolivia’s BMSC Ready for Challenge
Banco Mercantil Santa Cruz (BMSC), Bolivia’s biggest bank, says it is up to the challenge of deteriorating global markets conditions, and remains optimistic about short-term prospects. “We are fairly prepared,” Alberto Valdes Andreatta, vice president of finance and international affairs at BMSC tells LatinFinance. “You’re going to see some defaults coming in the second semester of 2009 . . . but most of the banks are 100% provisioned for non-performing loans. I don’t think it’s going to be that bad,” says Valdes. He adds that most Bolivian banks have a fairly strong base, with capital adequacy ratios of around 12%-13%. Valdes is cautious about the 2009-2010 outlook, given the pass through from the global environment. “What happens in Bolivia is that you get the effects 6-12 months later than the international markets,” says the banker. “We haven’t put a stop on the growth in our investment, we’re going to be aggressive in 2009 as well,” says Darko Zuazo Batchelder, BMSC’s vice president. The focus is more on mortgages and SME lending than consumer loans, where BMSC sees risk building. “2009 will be the same or better than 2008, all things being equal as we see them now. In 2010 we’ll see a little bit of a slowdown,” adds Zuazo. He adds that the macro outlook is relatively calm internally, and that big projects like Mutun will not be impacted. “There’s too much money involved,” says Zuazo of the $2.1bn project.
Posted inDaily Brief
Ecuador Bottler Caps Sale to Group
Coca Cola del Ecuador, a local bottler formerly known as Ecuador Bottling Company (EBC), has sold itself to a local investor group, ending months of wrangling between its shareholders and outside suitors, say people familiar with the deal. The Correa Group – already a majority shareholder in the company with around 51% of the shares – is understood to have acquired a 34.5% stake in EBC for over $64m, leaving it with a combined stake of close to 85%. The private group is heard to have used its own cash to pay for the stake, which belonged to another shareholder in EBC called Nobis Group. Nobis originally sought a sale to Chile’s Kopolar. However, Correa Group had right of first refusal and reportedly considered legal action to bolster its claim to the stake. Earlier this year, Kopolar withdrew its bid for EBC in a filing. Ecuador’s Analytica Securities advised the sellers on the deal.
Posted inDaily Brief
S&P Turns Negative on Bahamas
S&P has revised its outlook on the Bahamas to negative from stable, citing the impact of US contagion on the tourism and construction sectors, which is causing job losses and undermining banks’ asset quality. The ratings also cut its GDP growth expectations for 2008 and 2009 to 1.1% and 1.0%, respectively, from previous projections of 3.0% and 4.0%, respectively. Efforts to boost growth may also end up increasing government debt levels, says credit analyst Olga Kalinina, adding that the government has recently announced countercyclical policies, including a robust capital-spending program, new unemployment benefits, and relief for low-income households.
Posted inDaily Brief
Peru’s Norsemont Attracts Suitors
Norsemont Mining says it has received unsolicited offers from suitors interested in acquiring the company. The Canadian miner, which operates the Constancia project in southern Peru, has hired Fraser Milner Casgrain as legal counsel and is in search of a financial advisor to evaluate expressions of interest. No formal bids have been received yet, says the company. Norsemont Mining, which trades on the Toronto Stock Exchange and the Peruvian bolsa, has a market cap of CAD94m. Shares were down almost 5% November 24.
Posted inDaily Brief
Cemex Sets Minimum on Local Swap
Cemex has set a minimum spread to be paid on the 2011 UDI and MXP-denominated bonds it is offering through a bond exchange offer launched two weeks ago. The Mexican multinational cement producer will pay a minimum spread of 225bp over the government’s 3-year UDIbonos for the UDI notes it is offering, and a minimum spread of the 28-day TIIE plus 200bp on the MXP notes included in the offer. The spread can be raised at Cemex’s discretion, and will be finalized at the close of the offer period, expected December 10. The Mexican multinational cement producer is offering the new notes to holders of MXP5.7bn worth of local bonds coming due in the next four months. The notes being tendered include UDI-denominated bonds paying 6.50%, 6.28% and 5.30%, and MXP-denominated notes paying 90-day Cetes plus 0.99%. The new notes are rated AA on a national scale. Banamex and BBVA Bancomer are managing the process.
Posted inDaily Brief
Bancolombia Beats Expectations
Third quarter net income increased to COP367bn at Bancolombia, surpassing expectations of analysts at Colombian research firm Bolsa y Renta. That represents a 16% increase compared to the third quarter of 2007. The firm expected income to grow to COP324bn. For 2008 as a whole, Bolsa y Renta analyst Mauricio Restrepo expects the bank to see income grow 25.4% to COP1.36trn compared to the previous year. He also believes Bancolombia’s stock price will stand at COP14.25 per share in December 2008. On November 21 shares traded at COP11.08.
Posted inDaily Brief
Mexico’s GDP Slowing to a Halt
In 2009, Mexico’s GDP growth is likely to stay below 1.0% as US industrial production, especially in the auto industry, drops. Credit Suisse expects GDP to expand just 0.6%, Merrill Lynch expects a 0.4% increase and JPMorgan sees no growth at all. Merrill says that US industrial production will decline 6% in 2009, hurting Mexico. Since 80% of Mexican auto industry exports go to the US, Merrill expects the slowdown in the US to hurt consumer spending, dent employment levels, cause a drop in real wages and a decrease in worker remittances to Mexico next year. Credit Suisse expects Mexico’s industrial output to contract by 2.2% in 2009, compared to a fall of 0.3% in 2008. Analysts expect Mexico to expand by as little as 1.3% this year, down from 3.2% in 2007.
Posted inDaily Brief
Cap Cana Buys Time As Lenders Squirm
Cap Cana, the high-end Caribbean resort, has put a thin band-aid on a worrisome situation surrounding a $100m bridge loan that came due November 19. Miguel Guerrero, Cap Cana’s director in corporate finance and IR, tells LatinFinance the company has extended the maturity date of the bridge by six weeks until December 29, thereby avoiding a default that would have triggered cross default clauses on the company’s outstanding bonds. The group of lenders holding the bridge has also changed, says the executive. At least one of the six asset managers – understood to include five hedge funds and one larger mutual fund – said they wanted to sell down their position in the bridge loan, preferring to take a haircut today over holding their portion for an indefinite period of time, say executives familiar with the process. The new composition of the lending group is unknown. “This is positive news because it demonstrates willingness on both sides to remain at the table,” says one executive familiar with the company but away from the talks. Market participants have in the past weeks come to question Cap Cana’s willingness to meet its debt obligations, which has helped keep its bonds trading in the low 20s. The company warned on November 12 it was preparing itself for a cross default event thanks to worsening market conditions that have made it impossible to refinance the bridge. Cap Cana has hired Weston Financial Group to advise it on its debt negotiations.
Posted inDaily Brief
S&P Knocks Mexico Units of GMAC, Ford Credit
S&P has lowered the national scale ratings of GMAC Mexicana to CCC from B minus, and of Ford Credit de Mexico to B+ from BB, it says. Both actions follow cuts in the ratings of each of their respective parents, and both ratings continue with a negative outlook. The Ford action centers on the parent’s “difficulties maintaining necessary liquidity in 2009.” S&P has lowered GMAC in response to a launch last week of an exchange offer for $38bn in bonds, which S&P views as a distressed debt exchange.