Despite a rocky week for equities across the board, LatAm equity funds rose 1.00% in the week ended November 8, beating out the usual winner China region, which suffered a 5.96% loss in the same period, according to Lipper. In the year, LatAm equities are up 51.78%, versus 65.47% for China Region. The world equity funds group, comprised of 2,570 investors including all of the above mentioned groups, are up 20.21% so far this year.
Category: Regions
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Sanluis Tender, Bond Issue Extended
Mexico’s Rep Uno has extended its tender offer for securities at its subsidiaries, thereby delaying an associated bond issue. Holders of 8% of 2010 Sanluis Co-Inter notes and 8.875% of 2008 Rep Uno notes and Sanluis commercial paper now have until December 7 to receive $1,353 per $1,000. The extra time is being given to allow for better market conditions for the sale of some $275m in 2017 bonds funding the tender offer, according to bankers familiar with the transaction. Sanluis Rassini, the subsidiary selling the debt, went out with 11.5% guidance October 24. Morgan Stanley is managing the sale and serving as dealer manager on the tender.
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Mibanco Syndication Heads Moving Along
The syndication of a $30m B-loan for Mibanco, a Peruvian microfinance institution, is heading to the finish line, with a number of commitments for the relatively small tickets it is offering. The 3-year amortizer has a 1-year grace period, giving it a 2-year average life. It pays 150m over Libor and participants can expect fees of 60bp for a $5m ticket and 50bp for a $3m ticket. The IFC, which has joint books on the B-loan with Wachovia, extended a $29m bilateral A loan in June of 2006 to Mibanco. One of the main purposes of the deal, apparently the first international syndication for a microfinance institution, is to give it access to new banking relationships.
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Merrill Launches FX Indices
Merrill Lynch has set up three EM currency indices by region for Asia, EMEA and LatAm, to track the FX movements in emerging markets. The three indexes combined make up the ML Global Emerging Market FX index, which is designed to replicate a diversified exposure to USD in EM and provide a look at EM growth and asset performances. Daniel Tenengauzer, global currency strategy research head at Merrill, says fundamental analysis using the index shows EM currencies are still cheap.
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Fitch Rates Banco de Reservas, HSBC Panama
Fitch assigned a BBB plus rating to HSBC Bank Panama, reflecting the potential support from its parent and key role in the parent’s regional strategy. The shop finds that ratings are limited by Panama’s country ceiling and challenges of integrating it with Primer Banco del Istmo, whose ratings it affirmed at BBB plus. The shop also assigned a rating of B to the Dominican Republic’s Banco de Reservas, with a positive outlook. The rating is supported by factors including its ample market share and the improvement of profitability ratios, and limited by overexposure to the Dominican government, its shareholder, on its balance sheet and below average asset quality.
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Newland Resort Project Bond Talk Emerges
Newland International Properties, the builder of the Trump Ocean Club in Panama, has issued guidance of 9.375%-9.625% on a $220m 2014 NC3 bond issue. A US and European road show has concluded, with pricing as soon as today. The Trump Ocean Club is a resort being constructed on the Punta Pacifica Peninsula in Panama City. Proceeds will fund an escrow account with the entire amount necessary to construct the project, a reserve account covering six months of debt service and refinance a $15m loan. The 5.5-year average life deal is rated Ba3 by Moody’s and led by Bear Stearns.
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Moody’s Affirms Banamex Despite Parent Woes
Moody’s has affirmed Banco Nacional de Mexico (Banamex) ratings with a stable outlook following a downgrade of the parent due to subprime losses. “Banamex’s GLC deposit rating captures the benefits it draws from being part of the Citigroup network,” says Moody’s. Banamex is headquartered in Mexico City and reported MXP529.4bn in assets as of September 30.
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Peru’s Continental Syndicates $250m A/B Facility
Peru’s BBVA Continental is taking its $250m IFC A/B facility to general syndication, say bankers close to the process. The bank obtained a $100m A loan and is syndicating the $150m B portion, which is made up of a $100m 2-year facility at Libor plus 40bp and a $50m 5-year tranche at Libor plus 95bp. Exact tranche sizes for the BBB minus credit are still being determined. Standard Chartered and the IFC are leading the syndication. BayernLB, Chile’s BCI, Sumitomo Mitsui and Wachovia have all signed on as MLAs with $20m tickets. On October 26, the deal was launched to retail and the entire process is likely to close by November 16.
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S&P Raises Bolivia’s Mercantil Rating
S&P has revised its outlook on Banco Mercantil Santa Cruz (BMSC) to stable from negative, following a similar change in the sovereign outlook on Bolivia, reflecting the close linkage between the sovereign and financial system. It has a B minus/C local currency counterparty credit, foreign currency counterparty credit, and CD rating. “Despite the frail operating environment, BMSC has shown good performance, and, at this point, the ratings remain constrained by the sovereign’s creditworthiness,” says S&P.
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Subprime Shakeout Seen Rocking LatAm
Despite hopes of a decoupling from the US, LatAm is very exposed to the continued storm from the subprime crisis, warns Mexican central bank governor Guillermo Ortiz. In a speech to the Felaban annual assembly in Miami, Ortiz addressed the increase in risk perception caused by a lack of transparency and drop in inter-bank liquidity. “The impact on Latin America is going to be very significant,” says Ortiz. While most of the region’s banks are not directly hit by the crisis, the wider fallout in the US economy is of most concern to LatAm. “This is really a very significant crisis in the US,” says Ortiz, adding that there are grave concerns about what will happen next. The governor trotted out the decoupling argument touted by the bulls, adding, “I don’t buy that theory . . . A recession in the US will have a momentous impact on the rest of the world, and for sure in Latin America,” says Ortiz. The governor also struck out at the complicity of the rating agencies, likening them to conflicted appraisers being paid by house sellers to get the best valuation for their home. Analysts fear that US bank losses in subprime will bleed out over the next few years, eventually totaling hundreds of billions of dollars. Pimco’s Bill Gross told CNBC Monday that losses could amount to another $250bn over the next two years.