S&P has revised the Bahamas’ long-term ratings outlook to stable from positive, on potential contagion from a US slowdown. “The revision reflects Standard & Poor’s reassessment of the Bahamas’ growth and investment prospects during the next one to two years, given the country’s close tourism, financial, and trade links to the slowing US economy,” says the agency. S&P chopped its real GDP growth forecast on the Bahamas to 3.1% from 4.4% for 2007 and to 3.0% from 4.0% for 2008, based on below-par performance of the tourism sector, and a shrinking in the construction sector.
Category: Regions
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Colombia Keeps Rates on Hold
As expected, Colombia’s monetary policy committee chose to leave the benchmark interest rate unchanged at 9.50%. The notes from the Friday meeting did not express any indication of a change in rates in the future, notes Goldman. The bank points out that the committee appears to be more attuned to potential external shocks to growth that could derive from market instability and weakness in the US.
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Barclays Beefs Up LatAm Research
Barclays Capital has appointed Eduardo Levy Yeyati as director and head of LatAm research. He was previously senior financial sector advisor for LatAm and Caribbean at the World Bank, a role that he had previously held at the IDB. Yeyati, a former chief economist at Argentina’s central bank, will be based in New York and report to Piero Ghezzi, MD and head of EM research. Separately, Rodrigo Valdés joins Barclays as director and chief LatAm economist. He was previously director of research and chief economist at the Central Bank of Chile and will be based in New York, reporting to Yeyati. And Rogerio Oliveira has also joined the firm, as director and head of EM quantitative research. Prior to Barclays, he was a director and head of LatAm market strategy at Deutsche Bank. Oliveira will be responsible for leading the quantitative research effort across LatAm, EEMEA and emerging Asia, reporting to Ghezzi. “These appointments will enhance Barclays Capital’s emerging markets platform, an important part of our overall business strategy,” says Larry Kantor, MD and head of research at Barclays.
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Colinversiones Chases Power Plant
Colombia’s Colinversiones has made an offer of $112m for the 169MW Meriletrica power plant. The gas-fired in Medellin plant is owned by cement producer Argos. The Medellin-based holding company bought the Termoflores power plant in December for $320m.
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Citi Raises Mexico Equity
Citi has upgraded Mexico equity to overweight within LatAm, elevating it to the bank’s top pick in the region. The promotion is based on severe underperformance since end-2006, as well as the fact that the Bolsa has fallen close to Citi’s “US recession” target of 25,000. Also supportive is the fact that GDP growth is now forecast at 2.9% in 2008 and rates are set to fall 75bp to 6.75%. “At 11.4x forward earnings, Mexico is 10% below its recent average and at its cheapest relative to Brazil since late-2002,” says Citi. “Mexico has many stocks that we feel are now too attractive and too inexpensive to ignore. To play our upgrade, we highlight America Movil, Walmex, Femsa, Bimbo, Homex, Asur, ICA and Mexichem. Citi is keeping Brazil at overweight, saying that it is more risky but attractive for the long-term. “However, it is now further away from our “US recession” target of 50,000, while there is a growing risk that rates may rise later this year,” says the shop.
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Colombia’s Torres Jumps to PE Startup
Julio Torres, Colombia’s head of public credit, is leaving his post in February to start up a private equity fund to invest in Colombian infrastructure projects. “I felt like it was the right time to make this transition,” Torres tells LatinFinance. The PE fund will target a raise of $100m by mid-2008 and look to tap into a global investor base. Investment outside Colombia could also be a possibility further down the line. “Given my experience in structuring deals [at JPMorgan] and now having seen Colombia’s infrastructure needs first hand, this a perfect opportunity,” says Torres. He will be joined at the fund by a group of local executives. Torres spent 22 months as head of Colombia’s public credit, during which he oversaw the reduction and reprofiling of sovereign liabilities and the privatizations and IPOs of both ISA and Ecopetrol, where he held board seats which he will now relinquish. Prior to joining Hacienda, Torres spent 10 years at JPMorgan in various capacities, including as an infrastructure and project finance banker for the region.
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High-Yield Debt Waits for Market to Settle
Volatility in the US and regional markets this week has put the LatAm high-yield pipeline on ice. Net Servicos was set to wrap up a US and European roadshow yesterday, and is heard to be considering a transaction if conditions are favorable, which is not the case. Although the Brazilian cable operator has not announced specifics, it has approved the issue of up to $200m in BB rated 2018 dollar bonds via Deutsche Bank and Santander. Costa Rica’s Grupo M is in the middle of a presentation via Merrill Lynch expected to last at least until the end of this week. The retailer, which put off a BB-/Ba3 issue of 2018 bonds in November, has yet to announce a specific transaction. Meanwhile, Colombia’s ETB completed a roadshow last week via Merrill and Deutsche and awaits an opportunity to price up to $300m in peso-denominated 2018 notes.
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Bancomer Cuts Mexican Growth Outlook
BBVA Bancomer has cut its estimate for 2008 Mexican GDP growth to 2.7% from 3.4%. It cites concerns over falling external demand, most recently prompted by lower manufacturing activity reported for November and December. The bank added it expects the government to announce an updated forecast of about 3.0%. Banamex has also lowered its forecast, to 2.9% from 3.6%.
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S&P Places Ambac-Backed Debt on Negative Watch
S&P has placed three Mexican residential mortgage-backed securities insured by Ambac on ratings watch negative. The AAA-rated securities include a $100m issue from Su Casita and issues from Patrimonio of MXP990m, 264m in UDIs and 224m in UDIs. A total of 22 EM securities were put on ratings watch negative, including debt from Banco Itau Holding Financiera of Brazil and Banco de Credito del Peru backed by future cash receivables. S&P placed bond insurer Ambac Assurance’s financial strength, financial enhancement and issuer ratings on negative watch, after Ambac announced it would not proceed with a planned $1bn equity offering. Fitch has already downgraded Ambac two notches to AA.
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LatAm Insulated from US, CFOs Say: Fitch
A majority of LatAm finance managers surveyed by Fitch expect US growth of 1%-2% in 2008, indicating a slowdown that won’t become a recession. Those from Argentina, Mexico and Venezuela were among the most bullish – with more than 50% of respondents from those countries expect US economic growth to exceed 2%, the survey says. A clear majority of respondents also felt their country’s economy and businesses are now better insulated from a US slowdown than in the past. Most rank concern about their domestic economies above worries about the US and China. Most of the managers surveyed expect double-digit revenue growth and higher profit for their corporations in 2008 compared to 2007. The cautious optimism was also evident in their financing plans. More than 70% plan to borrow funds this year, with most indicating an inclination for domestic capital markets.