Trinidad and Tobago’s SEC is hoping to push through legislation in coming weeks to allow for the creation of a depository receipts (DR) board on the country’s stock exchange, Osborne Nurse, chairman of the SEC, tells LatinFinance. The move, wholly backed by the finance ministry, is an attempt to introduce market innovations that will give local investors more investment options and stimulate trade. The idea to do so was derived from RBC’s acquisition of RBTT, which will remove the latter’s shares from the local exchange, thereby cutting some 13% of the country’s entire market capitalization of roughly $20bn, says Nurse. The SEC requires that RBC list a DR in Trinidad to replace the shares it is buying. The hope, says the chairman, is to permit brokers to create and list DRs of foreign companies that are active in Trinidad, such as BP, BHP Billiton, Repsol and Mittal Steel, and offer them to local investors. The DRs would not be sponsored by the company, and the value would represent a fraction of that company’s stock, while mimicking the trading behavior of its native exchange. Nurse says the ratio of the DR to the original stock could be roughly 1:10, with a price per DR in line with the TTD30-TTD40 range seen in locally listed shares. In order to accurately mimic the trading behavior of the underlying stock, Nurse says the SEC will establish a market-making program and new regulation allowing for DR short-selling and lending.
Category: Regions
Banorte to Sell 2018 Bonds
Mexico’s Banorte has filed to sell up to MXP3bn in 2018 bonds, in a transaction expected to occur Wednesday. Proceeds from the Triple A locally-rated sale, will strengthen the bank’s capital base. Banorte’s own capital markets unit will manage the deal.
Caribbean Union Stalled by Takeover, Enforcement
Plans to establish a pan-Caribbean exchange are regaining momentum, according to Osborne Nurse, head of Trinidad’s SEC. The initiative has been stalled by several factors, including the Neal & Massy takeover of Barbados Shipping which consumed that country’s SEC for several weeks – and disagreements between Jamaica, Trinidad & Tobago and Barbados on how to enforce the local rules on foreign brokers. This coming Thursday, a meeting between the three commissions will be held in Barbados to further discuss the second issue. The proposal is to allow for a mutual recognition of each exchange’s regulations, thereby allowing these to discipline any infraction committed on their domestic exchange. The process, originally expected to be up and running by now, is still at least a month away from becoming official.
JPM Cuts Peru, Colombia Debt Technicals
An increase in local markets exposure and reduction in cash balances has prompted JPMorgan to cut its assessment of external EM debt technicals to positive from very positive. It dropped Peru to negative from neutral as investors sharply hiked exposure. “Peru spreads trade well inside their current credit rating, reflecting strong expectations of an imminent upgrade to IG by a second agency (Fitch already rates them BBB-), but with Peru’s weight in IG indices significantly smaller than for Brazil, should they qualify, the arguments for forced buying of Peru to minimize tracking error are weaker,” says the shop. It revised Colombia technicals to negative from neutral as exposures continue rising, while Venezuela was chopped to neutral from positive. JPMorgan adds that the remaining $18bn in scheduled sovereign debt issuance will be met by index cashflows of a similar magnitude. According to JPMorgan, inflows for the past month totaled under $1bn, the bulk of which was invested in local markets. It estimates year-to-date inflows into EM FX and fixed income from strategic and retail sources at $9bn. JPM also revised its full year 2008 inflow forecast to $30bn from $40bn. “External debt inflows have disappointed thus far this year, and outright outflows were even seen in retail external debt mutual funds. However, we remain optimistic on inflows into local markets,” says the shop.
Korea and Bolivia in Mining JV
Korean state owned mining company Korean Resource has signed an agreement with the Bolivian mining corporation Comibol to establish a $200m joint venture to exploit the Corocoro copper mine in Pacajes, province of La Paz, the Bolivian government says. The agreement provides for a further $10m investment in exploration. The partners expect to extract between 30,000 and 50,000 tons of copper per year at Corocoro.
India’s JKTyre Bags Mexico’s Llantas Tornel
Indian tire manufacturer JKTyre has purchased Mexican tire and rim company Llantas Tornel for $67m, the Mexican company says. The company plans to keep the Tornel brand and also launch the JKTyre brand all over the Americas, Raul Tornel, public relations manager for Llantas Tornel says. The current executive team will continue at the helm of the Mexican company, Tornel says, with support from executives from the Indian parent company.
Chile’s Ripley Prepares Bond
Chilean department store retailer Ripley plans to issue up to COP70.55bn in bonds. The C series bonds will have a maximum tenor of 30 years and be denominated in the UF inflation-indexed unit. The exact amount and timing will be announced at a later date. Proceeds will be used to refinance debt.
Brazil’s Cruzeiro Tests Institutional Appetite
Banco Cruzeiro do Sul plans to begin a non-deal road show Friday to gauge demand for a bond issue. The trip will visit the US, Europe and Asia before wrapping up June 26. The Brazilian mid-sized bank has already tapped the dollar market this year, but is now hoping to introduce itself to a different segment of the market, targeting institutional accounts rather than the retail and private banking buyside, according to an official with knowledge of the process. BCP and UBS are managing the operation. The pair ran the books on Cruzerio do Sul’s $110m 2010 bond in April, which priced to yield 7.5%.
Spain’s Acciona Wins Campeche XXI Bid
Spanish developer Acciona has won the bid to build the expansion of the Campeche XXI convention center in San Juan de Campeche, southeastern Mexico. Acciona says it will invest MXP220m in the expansion of the building. The project features electrical and sanitation facilities for the complex, as well as rooms for data and voice recording.
Moody’s Downgrades Tonala
Moody’s has chopped the issuer ratings of the Mexican municipality of Tonala to Baa1 on the local scale and B1 on the global scale. The rating change was prompted by a continued deterioration in financial performance over the last few years, the agency says. This has translated into large borrowing requirements and tighter liquidity levels. “The new ratings also take into account the absence of major contingent liabilities, as well as the municipality’s narrow economic base and large infrastructure needs,” Moody’s adds. The outlook incorporates a low likelihood that the involvement of some municipal officials in a corruption case will directly affect the municipality’s credit.