Mexico kept its policy rate unchanged Friday at 8.25%, saying the global economic deceleration has intensified. “During the first half, economic activity indicators in Mexico didn’t reflect the weakening of the US economy. However, more recent data suggest a deterioration, especially in private consumption growth and employment,” it says. The government expects inflation to approach its target of 3% during 2010, noting that it will likely moderate in the medium term thanks to the recent drop in commodities. Credit Suisse does not find the statement to be hawkish, but nor does it see the bank getting closer to easing policy. The shop estimates that Mexico’s year-on-year inflation will rise to an average of 5.8% in 4Q2008 from an average of 5.5% in 3Q, and that Mexico’s real GDP growth is likely to worsen in upcoming months. “We don’t think the central bank will be anywhere close to a position of easing monetary policy to address this problem until inflation gets much closer to the 4.0% level,” CS says. “We think this could happen by the middle of next year, at the earliest.”
Category: Regions
Colombian Packaging Company Clinches Funds
Phoenix Capital, the Colombian packaging company with assets in the US, Mexico and Venezuela, closed yesterday an $85m facility with tenors of 5 and 7 years. The deal, led by Standard Bank, is heard to have counted on the support of 10 banks, mostly based in the region, including in Colombia and Panama, say executives on it. The company is levered 4.6x and pricing is on a grid. A 5-year tranche pays Libor plus 425 out of the box, while a 7-year piece offers 525bp over Libor. The company is expected to reduce its debt starting this year. When it hits 2.5x leverage, it pays 275bp on the 5-year and 375bp on the 7-year. The deal follows a similar financing for Colombian chemical and plastics maker done in May – a $60m loan with two tranches: a $25m 5-year at Libor plus 285bp and a $35m 7-year at Libor plus 362.5bp out of the box. Standard also led that one.
HSBC Offloads Mexico’s Independencia
HSBC plans to divest its entire MXP1.45bn (18.7%) stake in Mexican microfinance lender Financiera Independencia. Two trusts operated by the lender’s controlling shareholders intend to acquire 77m of the 127m shares HSBC will sell. The controlling shareholders subsequently plan to reduce the company’s equity through the amortization of 50m million shares at the same price as the purchase from HSBC. The two transactions will boost the controlling shareholders’ stake in the company to 81.2% from 63.9%. HSBC is selling its stake to focus on core banking activities, and its Mexican unit will increase Independencia’s outstanding credit line to MXP2.5bn from MXP2.0bn. Independencia shares closed at MXP11.45 Thursday.
GMAC Mexicana Readies Auto ABS
GMAC Mexicana is preparing to sell up to MXP1.6bn in 2010 floating-rate bonds backed by a pool of auto loans. The transaction is set to price September 24 and will include a 2010 subordinated piece of around MXP400m. Although GMAC’s Financiera and Hipotecaria units have issued MBS in Mexico, this offering would be the first securitization by GMAC Mexicana, the auto loan unit. Scotia is managing the sale.
IFC Lends to River Barge Operator
IFC will provide a $60m financing package to Bahamas based vessel operator UABL, whose river barges transport iron ore and soy products in the Parana-Paraguay river area destined for markets in Europe and Asia. The loan will finance the company’s expansion, that will help connect Bolivia, Western Brazil and Paraguay with the Atlantic, the IFC says. “This investment will increase the options for river transportation over more than 2,200km of waterways, using a fuel-efficient method that will help mitigate climate change,” the IFC adds.
Ecuador FinMin Door Revolves Again
Maria Elsa Viteri has become Ecuador’s finance minister, replacing Wilma Salgado, who resigned after disagreement with president Rafael Correa. Analysts do not expect Viteri, who had been the general undersecretary of finance, to make any major policy shifts. There is a close eye on the ministry this week, amid reports that a special debt audit commission will declare the country’s 2012 and 2030 dollar bonds “illegitimate.” Alessandra Alecci, senior analyst at Moody’s, says that neither the commission’s plans nor a change in finance minister have an impact on her agency’s view of the sovereign. She notes that the commission lacks the ability to make policy, and that uncertainty is factored in to the B3 rating. JPMorgan notes in a report that Ecuador’s 2015 bonds, excluded from the commission’s “illegitimate” list, could outperform 2012s and 2030s, which could see pressure if Correa hints at a restructuring. “We expect Ecuador to continue servicing bonds for now, only turning to a possible restructuring scenario in 2009 after the current political cycle is over,” the shop notes.
Peru Tollroad Heads for Bond Market
In the face of unequivocally rough markets, Peru’s IIRSA Tramo 5, the last stretch of tollroads in the Interoceanica highways, is set to price next week, barring further meltdown, say executives close to the issuer. Three tranches of notes totaling $260m are planned: an $85m 2020, a $100m 2030 and a $75m 2030 zero-coupon bond. The zero-coupon note is being offered locally to Peruvian cash investors, with total proceeds to the issuer expected in the $18m-$20m range. BCP will jointly place the zero-coupon tranche, while lead bank BNP Paribas is responsible for the remainder. Offshore investors can access the notes directly with cash or synthetically through a CLN like structure to be issued by BNP. People familiar with the issuer’s plans say sponsors Hidalgo & Hidalgo are hoping for yields of around 7%-8%. The deal has similar collateral as the previous offerings – CRPAOs, or government-backed certificates to finance infrastructure – but the structure has some new features, including a delayed draw, which reduces the negative carry, say bankers on the transaction. Fitch rates the bonds BBB minus.
LatAm Equity Continues Free Falling
Following last week’s trend, LatAm equity funds dropped 5.54% the week ending September 11, according to Lipper. EM funds sank 4.61% while China region funds lost 4.14%, Lipper data shows. Gold oriented funds experienced the biggest drop of the week, losing a whopping 11.09%, while consumer goods funds saw the biggest returns, gaining 3.41%. In the week before, LatAm equity tumbled 9.54% while EM funds shed 7.37%, according to Lipper. Year to date, LatAm funds are down 23.00%, versus an average 25.29% overall loss, Lipper says.
Brookfield Eyes Colombia Opportunity
Major global real estate player Brookfield Asset Management (BAM) is surveying the opportunity in Colombia’s ripening infrastructure market. “Brookfield Asset Management has been actively looking for investment opportunities and is generally bullish on Colombia, which we see growing rapidly during the next decade,” says Denis Couture, BAM’s senior vice president for government relations and international affairs. “At this stage, we are mostly interested in infrastructure investments.” BAM is a Toronto and New York listed asset management firm with more than $70bn under management. Colombia is heating up generally for real estate and infrastructure investors. Foreign private equity funds are surveying the opportunity in the office and industrial market, but they have yet to close any substantial transactions. Investors are seeking experienced local partners. “Colombia is emerging as an important target market for global private equity firms, and a number of local managers are currently raising venture capital or private equity funds,” says Cate Ambrose, executive director of the Latin American Venture Capital Association.
Mexican Builder Mulls Punta Colonet
ICA, the integrated Mexican construction firm, is mulling its strategy regarding the $4bn+ port at Punta Colonet in Baja California. “It’s quite important, we’re studying it, we’re looking for partners,” Alonso Quintana, CFO at ICA, tells LatinFinance. Mexico’s government opened bidding late August for the contract to build LatAm’s first greenfield port. Quintana adds that a natural partner would be Goldman Sachs Infrastructure Partners, with which ICA worked on the first Farac project. “It’s a bit more interesting as a construction project than as the whole concession, but we would still be looking at the concession as well,” says the CFO. Quintana expects the winner to use traditional project finance to fund the deal. “Once the cashflows are transparent enough and visible for the banks, there’s ever more creative ways of putting the money in,” says the official. The government says the project should be ready to start construction next year for completion in 2012. Some analysts say it could cost as much as $7bn. The West Coast facility is the biggest in president Calderon’s infrastructure plan and should divert container traffic away from the congested US ports of Long Beach and LA, via a planned rail connection to the US. Carlos Slim’s IDEAL has formed a consortium to bid with Grupo Ferromex and cargo terminal operator MTC Holdings. The government says it has more than 50 interested bidders. Hutchison Port Holdings, SSA Marine, DP World, Union Pacific and BNSF are also expected to participate.