Peru’s central bank said Wednesday evening it was taking a series of measures to help reduce what it calls speculative flows into the country and in turn stem the strong recent appreciation of the currency. The measures take effect starting in February. The minimum reserve requirement for existing and new deposits was raised to 7% from 6%. Banks’ minimum required central bank deposit percentage was raised to 2% from 1%. The marginal reserve requirement for Sol-denominated deposits was established at 15%, while the marginal reserve for dollar-denominated deposits was raised to 40% from 30%. Central bank president Julio Velarde reportedly denied Peru would implement outright capital controls. “The higher reserve requirement should increase the banking system’s demand for dollars and make it easier for the central bank to absorb new dollar inflows,” observes Credit Suisse. In the past week, foreign investors have been taking long PEN positions in the NDF market, betting on a continued appreciation of the Peruvian currency, a Wall Street salesperson tells LatinFinance.
Category: Regions
Colombia Sells $200m in Local TES Debt
Following its $1bn Tuesday reopening of Global 2017s and 2037s, Colombia has sold COP400bn ($199.9m) in local treasury bonds. It priced COP91.9bn in 2020 notes and COP81.9bn in 2015 notes at 10.45%, COP119.1 in 2013 notes at 10.44% and COP96.1bn in 2009 notes at 10.12%. Demand reached COP1.37trn, the government says. The sale was the first of what the finance ministry said will be COP12trn in TES notes sold this year.
Colombia Retaps 2017, 2037s for $1bn
Colombia’s was the last LatAm issuer through a tight market window yesterday, reopening its 2017 and 2037 Globals for $1bn. The sovereign priced $650m in 7.375% 2017 notes at 109.500 to yield 5.997%, or 222bp over UST, and $350m in 7.375% 2037 notes at 110 to yield 6.601%, or 229bp over UST. The pricing matched guidance – 109.5 on the 2017 and 110 on the 2037 – given earlier in the day for the Ba2/BB+ transaction. The order book reached about $1.4bn, according to a banker on the deal, but the deal was announced with “will not grow”. Demand skewed more than expected to the 10-year notes. Bankers not on the deal say the issuer sacrificed a few basis points to get the transaction done yesterday, owing to choppy markets. Proceeds will go towards financing the country’s budget deficit. Credit Suisse and Merrill Lynch were joint bookrunners.
Kroll Opens Up Shop in Grenada (1)
Kroll, the risk consulting company, has opened an office in Grenada to cover clients throughout the Eastern Caribbean. The firm plans to provide a full range of risk consulting services, including investigations, forensic accounting, asset tracing, litigation support, insolvency and due diligence. It will also work closely with Kroll’s corporate advisory and restructuring affiliates in the Cayman Islands and British Virgin Islands. The office will be led by David A. Holukoff and Glen E. Harloff. Grenadian citizen Holukoff specializes in offshore banking and financial institution insolvency matter. Before Kroll, he was with PricewaterhouseCoopers in Grenada and Canada. Harloff, a forensic accountant and former law enforcement officer, is a specialist in white-collar crime investigations. Prior to joining Kroll, he held senior positions at LECG and PricewaterhouseCoopers. “More and more engagements – whether out of London, New York, Miami or Hong Kong – have significant “offshore” components, and usually in the Caribbean,” says Sam Anson, Kroll regional MD for LatAm and the Caribbean.
Kroll Opens Up Shop in Grenada
Kroll, the risk consulting company, has opened an office in Grenada to cover clients throughout the Eastern Caribbean. The firm plans to provide a full range of risk consulting services, including investigations, forensic accounting, asset tracing, litigation support, insolvency and due diligence. It will also work closely with Kroll’s corporate advisory and restructuring affiliates in the Cayman Islands and British Virgin Islands. The office will be led by David A. Holukoff and Glen E. Harloff. Grenadian citizen Holukoff specializes in offshore banking and financial institution insolvency matter. Before Kroll, he was with PricewaterhouseCoopers in Grenada and Canada. Harloff, a forensic accountant and former law enforcement officer, is a specialist in white-collar crime investigations. Prior to joining Kroll, he held senior positions at LECG and PricewaterhouseCoopers. “More and more engagements – whether out of London, New York, Miami or Hong Kong – have significant “offshore” components, and usually in the Caribbean,” says Sam Anson, Kroll regional MD for LatAm and the Caribbean.
FARAC Takeout Not Before H208
Long-term debt financing to replace the 7-year facility supporting purchase of the first FARAC Mexican toll road concession is expected in the second half of 2008 or later, Pablo Garcia, director of project finance at Santander in Mexico tells LatinFinance. At least that amount of time will be needed to study the assets’ performance, he adds. A long-term bond is the likely instrument, with the main decision being whether to issue in pesos, UDIs or dollars swapped to pesos. Sponsors Empresas ICA and Goldman Sachs Infrastructure Partners won the concession last summer, and the groundbreaking MXP37bn financing led by Santander is now in retail syndication.
Colombia Banking System Stable, Says Moody’s
Moody’s gave a stable outlook to Colombian banks, which carry an average D+ financial strength rating. The agency cites strong financial performance, adequate risk management practices and positive regulatory support. “We believe that Colombian banks are well positioned to profit from growing banking activity,” says analyst David Olivares-Villagomez. Lending as a percentage of GDP reached 32% in mid-2007, boosted by robust consumer-loan growth. Moody’s says the ratio is still modest by international standards, and points to potential growth opportunity as the economy expands. The agency says Colombian banks would gain from further improving metrics – core capitalization, operating efficiency, loan granularity and profitability ratios – which tend to lag other LatAm countries, despite Colombia’s high 9.5% interest rate. Bolivian banks also received a stable outlook from the agency.
Colombian Rates Pressured by Inflation
Colombian consumer price inflation was a higher-than-expected 0.49% month-on-month in December, driven by food. Inflation last year exceeded the 4.5% upper limit of the target band, which may pressure rates, according to Goldman Sachs. “If the economy fails to decelerate convincingly from a still-strong, above-trend pace and/or credit and money growth reaccelerates the central bank might have no option but to hike rates again in late 1Q2008 or during 2Q2008 in order to protect the 2008 inflation target,” says the shop. “Missing the inflation target two years in a row would significantly erode the credibility of the central bank,” it adds.
Modelo Plots Canada Invasion
Mexico’s Grupo Modelo has teamed up with Canada’s Molson Coors Brewing Company to sell its beer in Canada. The pair established a long-term joint venture known as Modelo Molson Imports, to import, distribute and market the Modelo beer brand portfolio in all Canadian provinces and territories, effective January 1. The joint venture board will consist of 6 directors, half from Grupo Modelo and half from Molson, including Jose Pares, VP International Markets for Grupo Modelo, and Dave Perkins, Molson Coors Chief Strategy Officer. The 50/50 joint venture will be headquartered in Toronto and led by Robert Armstrong, previously CEO for Modelo in Canada.
Moody’s Lowers GMAC Mexico
Moody’s has downgraded GMAC Mexicana SOFOL’s local long- term debt rating to A3 from A1, and GMAC Financiera SOFOL’s to A3 from A1, it said. The action followed the agency’s downgrade of General Motors Acceptance Corporation ‘s long-term debt rating to Ba3 from Ba2. The rating outlook on GMAC rating is negative.