LatAm appears to be in for a rougher 2008 than Asia or EEMEA, according to research from Merrill Lynch. “While our base case is one of decoupling from the US slowdown, we think that 2008 will be a more challenging year for Latin America,” says the shop. “The main challenges will stem from both a less favorable external environment and from inflation constraining policy domestically,” it adds. Risks include a slower US economy, potentially tighter credit conditions and softer commodity prices. “A further, albeit evolving, aspect here is how the effects of the weakening USD will play out in terms of global risk appetite and across the region’s competitiveness,” says Merrill. On the ground, LatAm is dogged by inflation, which limits expansionary fiscal policy and/or monetary easing. However, decoupling stands the region in good stead. “As domestic demand picks up and consolidates through stronger and deeper financial markets, the LatAm and US business cycles should remain less correlated than in the past. Also stronger public and corporate balance sheets make LatAm less dependent on foreign savings and, hence, on global credit swings,” says Merrill. It predicts investment grade Peru and Brazil in late 2008 and regional growth of 4.6% in 2008.
Category: Regions
Bimbo Appoints New Head
Mexican baker Bimbo has appointed Barcel’s Javier Gonzalez Franco as director general. His predecessor Pablo Elizondo Huerta becomes adjunct director general at Grupo Bimbo and Gabino Gomez Carbajal takes over from Gonzalez at Bimbo subsidiary Barcel.
Petrotemex Signs $150m Loan
Mexican petrochemicals company Petrotemex has secured $150m in commitments for a dual currency loan, the syndication of which is now wrapped up, say bankers familiar with the transaction. It pays on a net consolidated debt to Ebitda grid, which, at above 3x leverage, pays 60bp over TIIE and 70bp over Libor. In the 2.5x-3.0x band, it pays 45bp and 55bp respectively. At 2.0x-2.5x, it pays 30bp and 45bp. And at less than 2x, it pays 20bp over TIIE and 40bp over Libor. The company is heard to have current leverage at the high end of the grid. Standard Chartered led.
Peru LNG Project Seeks Lenders
An RFP has gone out for a syndication of up to $1.05bn in debt to support a $2.25bn financing for the Peru LNG liquefaction terminal, according to officials at financial advisor Societe Generale. Banks have until December 17 to pitch for roles in arranging a $250m B loan from the IDB and ECA guarantee facilities from the US Export-Import Bank ($400m), Export-Import Bank of Korea ($150m) and Italy’s Sace export credit agency ($250m). The remainder of the financing comes from a $300m IFC A loan, a $400m IDB A loan, a $150m direct loan from the Export-Import Bank of Korea, and $350m in local bonds underwritten by Peruvian banks. The financing is expected to close by the end of February and each tranche will have a tenor of 18-20 years. Construction on the $3.8bn, 625m cubic feet per day terminal in Pampa Melchorita, south of Lima, began in January and is expected to wrap up by mid-2010. About $1bn has been spent so far, coming through equity from sponsors Hunt Oil, SK Energy, Repsol YPF and Marubeni.
GEO CFO Steps Down
Victor Segura, CFO of Mexican homebuilder Corporacion GEO has resigned due to health reasons, according to the company. Starting December 1, Saul Escarpulli, director of finance, and will take over his financial duties and Daniel Gelove, corporate director of administration, will assume his administrative duties. Both will report to CEO Miguel Gomez-Mont.
Jamaica Gets Down to Business
After years of malaise, Jamaicans are hopeful that a new government will bring a change in economic policy. The private sector welcomes early encouraging signs.
Gigante Launches Debt Buyback
Mexican retailer Gigante has launched an offer to buy back its $260m 8.75% of 2016 senior bonds. The offer managed by Citi will expire December 27. It pays a $20 per $1,000 premium for holders participating before December 12. No new issue has been planned to fund the purchase, according to a banker on the deal.
Grupo Elektra Names CFO
Mexican retailer and financial services provider Grupo Elektra has named Guillermo Colin as CFO. He joins from Banco Azteca, where he was also CFO.
Colombia Approves $1.1bn Bond Sale
Colombia’s congress has authorized the sale of up to $1.1bn in bonds in the international market to finance a 2008 budget deficit, according to local media reports. The debt will be sold next year.
Debut Mexico REIT on the Way
An inaugural Mexican REIT failed to launch earlier this year for tax reasons. However, bankers hope for a boom once the first is out of the gates in 2008.