Moody’s has upgraded Ecuador to B3 (stable) from Caa2. The action is supported by the easing of financial difficulties owing to high oil prices and low likelihood of a switch by the government in its policy of remaining current on its accounts to implement the social agenda. However, the agency sees dim prospects of further upgrades in the medium term, citing the elimination of the oil savings fund by the new fiscal framework. “This is an issue of concern for creditworthiness, particularly given Ecuador’s traditionally weak institutions,” Moody’s says. The agency also notes that Ecuador likely registered the lowest growth rate among global energy-producers last year, in part due to a contraction in investment amid policy uncertainty.
Category: Regions
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Telmex to Sell MXP Debt
Telefonos de Mexico has filed plans for a new fixed- and floating-rate bond offering under the MXP10bn shelf it filed in December. No information was given on the size or the tenor of the transaction, which it expects to place in April. Inbursa is managing the sale.
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Interbank Restructures, Flexes New Loan
Peru’s Interbank has restructured and increased the margin on a $200m 3-year loan. The deal, launched in early March as a working capital 3-year step up, has now been broken into two parts: a $100m trade facility at 80bp, 85bp and 95bp over Libor in years one, two and three, and a $100m working capital facility at 100bp, 110bp and 120bp over Libor, according to a banker close to the process. Participants can expect fees of 35bp plus an additional 5bp for early commitments, adds a banker away from the deal. Originally, pricing for the entire facility, made up entirely of working capital, was 80bp, 85bp and 95bp over Libor. But that apparently did not go over well with market participants and was subsequently changed to reflect the current pricing. This is the fourth time a LatAm bank has flexed up pricing on a loan this year. Others, such as Peru’s BCP and Brazil’s BicBanco and Unibanco also had to adjust margins as expectations changed. Standard Chartered, which has taken a particular focus on financial institutions this year, has had a leading role on all those deals including Interbank, for which it is sole bookrunner.
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GMAC Mulls Mexico Issue
Frequent peso issuer GMAC is considering returning to the Mexican market. “Right now we’re just having conversations,” a GMAC official tells LatinFinance. He adds that Mexican pricing has only flared by around 15bp in the recent credit turmoil, making that market still attractive for long term fund raising.
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Bear Tips Trinidad and Tobago Bonds
Bear Stearns is recommending Trinidad and Tobago’s bonds based on the country’s financial resilience. “We view T&T as a strong story in the current environment of risk aversion and maintain our outperform recommendation on T&T bonds,” the shop says. “Current account and fiscal surpluses, policy stability (in contrast to some other oil countries) and high oil prices should provide strong buffers against the global shocks we are currently experiencing,” Bear states.
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PR’s CRI See Breaching Covenants
S&P has cut Puerto Rico-based Caribbean Restaurants (CRI) to CCC+ from B. The outlook remains negative. “The downgrade reflects the distinct possibility that the company will breach financial covenants of its bank facility at its fiscal year-end,” says S&P credit analyst Jackie Oberoi. The fiscal year ends April 30 and the covenants become increasingly restrictive at the end of July. “The downgrade also reflects the company’s continued weak performance, which has been driven by a soft Puerto Rican economy coupled with increased labor, utility, and commodity costs,” adds Oberoi.
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AIG Buys Colombian Lender
American International Group’s will enter Colombia after its AIG Consumer Finance Unit agreed to buy Inversora Pichincha from Ecuador’s Banco Pichincha and other minority shareholders. Bogota-based Inversora Pichincha provides consumer and commercial auto loans and unsecured consumer credit. The terms of the deal were not disclosed.
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LatAm Equity Investors Bag Slim Returns
LatAm equity funds gained 0.10% the week ending March 13, according to Lipper. EM funds lost 1.50%, while China region funds sank 3.16%. LatAm outperformed the world equity funds group, which meanwhile saw a pickup of 0.05%. The biggest gains were made by real estate, which climbed 3.34%, and small cap value funds with 2.36%, according to Lipper.
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Peru GDP Growth Seen Slowing: CS
Peru’s impressive expansion looks set to slow, according to Credit Suisse, which predicts real GDP growth of 6.5% in 2008, from 8.9% in 2007. The shop sees tightening in monetary policy and a less favorable global environment as slowing factors. Domestic demand growth will ease to 9% this year, down from 12% in 2007. A gradual decline in consumer spending growth in coming quarters could happen since consumer sentiment has gradually weakened since 2Q 2007. Private investment growth will also likely decelerate due to weaker domestic and global demand, says CS. Import growth will likely also fall this year in real terms, in tandem with domestic demand, but the change in net exports will still drag down real GDP growth by about 2.7 percentage points, the shop says.
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Scotia Prices Wide with Jumbo Mexican RMBS
Scotiabank Inverlat priced MXP2.5bn in RBMS due 2028 at 9.15%, wide to the 8.95% it had targeted. The transaction was about 2.5 times oversubscribed, according to a banker managing the sale. The issue is the first from a MXP10bn shelf and the largest RMBS transaction in Mexico so far this year. The pool of 2,750 mortgages originated by Scotia comes from throughout Mexico, with just over a third from DF. Scotia managed the sale.