Led by Panama and propelled by trade agreements, Central America seeks to extend growth. With stronger links to the US and Europe, it must decide how far to integrate.
by Ben Miller
Category: Regions
Posted inDaily Brief
Ecuador Rejects America Movil Concession
The Ecuadorean government has rejected America Movil’s $307m offer to maintain its mobile phone concession in the Andean country, according to Senatel, the country’s telecoms regulator. The Mexico-based firm, which operates in Ecuador through its Porta subsidiary, will continue to do so until August of this year, when the concession expires, Senatel says. Telefonica’s Movistar pledged $200m to maintain its concession in Ecuador, where it has 26% market share, the regulator says. Porta controls almost 70% of the market. A spokeswoman at America Movil declines to comment, adding that the company has not being officially notified of the measure.
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Ecuador Prioritizes Banco del Sur
Ecuador will discuss the constitution of Fondo del Sur – an alternative to IMF and World Bank for LatAm suggested by Ecuadorean president Rafael Correa a year ago – after the Banco del Sur is established, according to Fausto Ortiz de la Cadena, the country’s finance minister. In the meantime, the Andean nation plans to invest $400m in Banco del Sur and expects to borrow up to 8x that amount once the multilateral is consolidated, wires report.
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Spanish Firm Wins Peru Transmission Bid
Spain’s Empresa Isonor Transmision has been awarded two 30-year concessions totaling $181m by Peru’s Proinversion privatization agency to build and operate transmission lines. The 760km Mantaro-Carveli-Montalvo line should require investment of $145.6m, while a 200-kilometer Machupicchu-Cotaruse line needs $35.4m. The electricity is expected to be used partly for several mines being developed in the southern part of Peru. Isonor beat out Interconexion Electrica of Colombia, Terna Participacoes of Brazil and Abengoa Peru. Abengoa won a 30-year concession in Feburary for the 700km $106.1m Carhuamayo-Carhuaquero line, for which WestLB is arranging financing.
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Peru’s Ajegroup Targets MXP/USD Loan
Peruvian beverage multinational Ajegroup is seeking to syndicate a $100m 5-year senior secured term loan and a $15m 3-year revolver, say bankers familiar with the terms. The bottler is raising a facility for Mexico, which will be denominated in MXP and dollars, but guaranteed by the Peruvian parent. The entire facility will pay Libor or TIIE plus 350bp. Citi and Rabobank are leading and proceeds will likely support Mexican operations. The deal marks a debut financing for the group, which has thus far used internal resources to fund its overseas expansion. The firm is present in all the countries of South and Central America above Peru and now has its sights set on Asia. Annual sales last year were estimated at $450m. A 2005-2010 strategy focuses on internationalization, consolidation and innovation. The newest venture is beer, following the launch last year in Peru of the Franca brand.
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Kexim Retaps Peso Bonds
The Export-Import bank of Korea (Kexim) has retapped for MXP1.1bn its 8.61% of 2017 Mexican peso-denominated bonds. An MXP800m tranche priced at 99.23 to yield 8.73%. It follows a MXP300m tranche that priced last week at 98.16 to yield 8.90%. The transaction was rated A+ by Fitch. Merrill Lynch managed the sale, a retap of an MXP1bn offer done in October. Kexim also placed in January MXP1.2bn in 2013 floaters at TIIE plus 30bp.
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Industrial Heard Wrestling with Hybrid
An eerie silence about Guatemala’s Banco Industrial’s 2068 hybrid Tier-1 capital issue leaves bankers at competing shops assuming the worst. The exact amount of the Ba3/B+ rated Reg S issue was not specified, but a size of $30m was rumored to have placed with locals, well shy of the $100m expected. A coupon in the low 9% area was expected for the first 10 years, after which the interest floats at fixed spread above Libor. Despite captive demand from Guatemalan investors, pricing may have been aggressive for such a complicated structure. Last week in Europe, Natixis placed $750m in A1/A+ perpetual Tier-1 notes at 10%. Guidance was 9%-10% for the fixed portion of the Industrial issue. Credit Suisse is managing the transaction. Neither bankers on the deal nor the issuer answered requests for comment.
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Mexican PE Fund Buys Education Company
Mexico-based private equity shop Nexxus Capital has acquired a 60% stake in private education provider Harmon Hall Holding. The purchase, made through the Nexxus Capital private equity fund III, cost between $25m-$30m, Roberto Terrazas, a director at the fund, tells LatinFinance. Harmon Hall specializes in teaching English in Mexico, with 105 language schools around the country. Nexxus focuses on sectors including health, education, tourism, services and housing, Terrazas adds.
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Fitch Upgrades Vitro Following Refi
Fitch has upgraded the national scale ratings of Mexican glassmaker Vitro to BBB minus (mex) from BB+(mex). The agency affirms Vitro’s foreign currency debt ratings at B, and its senior unsecured notes due 2012, 2013 and 2017 at B+. The outlook is stable for all ratings, which cover approximately $1.2bn in debt. Vitro’s ratings reflect the company’s improved financial profile and capital structure after a refinancing process completed at the beginning of 2007. That consisted of a sale of $1bn in senior unsecured notes in two tranches: $300m and $700m with final maturities of 2012 and 2017. With this deal, Vitro mitigates short-term refinancing and liquidity risks, while also eliminating structural subordination following the take out of secured operating subsidiary debt, says Fitch.
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Caribbean Seen Reliant on Investment
Caribbean countries will depend on their ability to maintain a high level of investment as they enter the hurricane season amid a global economic downturn that could hurt tourism and remittance flows, according to S&P. The sustainability of both domestic and foreign investment is especially important because exports, the other main driving force for GDP growth, are becoming more vulnerable to the negative external environment, says the agency. “Overall, we expect the commitment to fiscal consolidation to prevail, increasing policymaking transparency to boost investor support, and a timely monetary response to help maintain stability in the exchange market,” says S&P. All this should afford the small and open Caribbean economies “adequate protection against the rising winds from the North,” notes S&P, referring to hurricanes and economic turbulence.