In response to rumors, Guatemala’s Banco Industrial categorically denies that it is up for sale. “That’s absolutely false,” Diego Pulido Aragon, director of Corporacion Banco Industrial, tells LatinFinance. “The bank is not for sale. There aren’t even any discussions about it. There is no interest in selling to anyone,” he affirms. Industrial is leading the consolidation drive in Guatemala and also looking to other Central American markets. Pulido expects to announce a Honduras acquisition in two weeks and says a purchase in El Salvador should follow. Industrial has 28.5% of the market by assets, according to Fitch. Industrial’s ROA (1.2% at year-end 2006) and ROE (16.8%) place it among the most profitable of Guatemala’s large banks. But after relying on shareholder investment for capital, Industrial must now devise other means of raising funds, and Fitch identifies capitalization as the weak point in the country’s banking system. The bank is considering a public offering.
Category: Regions
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.
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.
S&P Raises Bolivia Outlook
S&P has revised its outlook on Bolivia’s B minus rating to stable from negative on more promising macro policy and improvement in key economic and vulnerability indicators. “Political noise is likely to remain high over the coming months as the constituent assembly aims to conclude its work, but we expect the policy outlook to remain unchanged, says S&P analyst Lisa Schineller. “The focus should remain on a greater role of the state in the economy amid macroeconomic policy implementation supportive of economic stability.” Inflation exceeded 11% in October, year-on-year, while real GDP growth is projected at 4% in 2007 and 2008. The government is running a fiscal surplus and the country has a current account surplus, says S&P. Projected general government fiscal surpluses of 3.2% of GDP in 2007 and 2.5% in 2008 compare with a record 4.7% of GDP surplus in 2006. “Robust exports and remittances put Bolivia’s current account on track for another double-digit surplus of close to 11% of GDP this year,” says S&P, adding that reserves were more than $4.8bn in October. “Coupled with significant official debt relief, this puts Bolivia in a net external creditor position, compared with net external debt that averaged over 100% of current account receipts in 2003-2005,” S&P adds.
Nemak, Ferromex Plot Local Debt Issues
Mexican autoparts maker Nemak plans to issue MXP2.5bn in bonds on or around November 15, according to a banker on the deal. The offering will be split into a 2014 bullet FRN basis TIIE, and a 2017 bullet tranche that could be fixed or floating. The amounts of each remain to be set. Proceeds will repay a term loan. Banamex, BBVA and HSBC are leads. That same week, Ferrocarril Mexicano is expected to price about MXP2.5bn in bonds, consisting of a 2014 floating-rate tranche and 15-20-year fixed. The proceeds will refinance old debt. BBVA, IXE, and Banamex are leading. “The local market is back,” says a banker mandated on the deal. “The pipeline that was there before the summer has returned, along with additional issuers wanting to execute before year end.”
Panama Canal Railway Prices Bonds
The Panama Canal Railway has priced a $100m 2026 144a senior secured note offering at par with a 7% coupon, according to Dealogic. Proceeds from the financing will be used to prepay IFC debt and shareholder loans, as well as fund capex for the next two years, including an expansion in operating capacity. Morgan Stanley led the Baa3/BB sale.
Panama Resort Hits Road with Bond
Newland International Properties, the builder of the Trump Ocean Club in Panama, plans to sell $220m in 2014 NC3 144a/Reg S senior secured project notes. A US and London road show begins today in Miami, with expected pricing November 8. 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. “The company has an experienced management team with decades of collective real estate development and construction experience,” says Philip Kibel, Moody’s analyst. “The pace and nature of pre-sales is a positive credit characteristic,” he adds. The debt also has adequate collateral, according to Moody’s. The other resort deal in the market, a $110m private placement for Metro Country Club in the Dominican Republic, is heard struggling. It consists of a $75m senior secured notes issue due 2013 and a $35m subordinated PIK issue due 2014. Price indications are heard in the 12.00% area and 13.50% area for the deal, which carries a B minus from Fitch on the senior tranche. Stephens is the underwriter.
Best Bank – Guatemala
There were 24 Guatemalan banks as of mid-2007, down from 34 in 2000, and the sector is ripe for further consolidation to achieve economies of scale, modernization, new products, and […]
IM Trust Looks to Peru and Colombia
IM Trust, the dominant Chilean investment bank, is expanding into some neighboring countries, in particular Peru and Colombia. In Colombia, it is teaming up with boutique investment bank Q&A Consulting. “We see a very good opportunity in the corporate finance business to be developed in Peru and Colombia,” says IM Trust executive director Guillermo Tagle. He adds that the larger Latin markets like Brazil and Mexico are less attractive because they are well banked by the bigger global players. But he does not rule out further expansion into Brazil or Argentina, for example, at some stage. “We have to go step by step,” says Tagle. (For more on IM Trust, see the November issue of LatinFinance.)
Best Bank – Peru
Banco de Crédito del Peru (BCP) is the most formidable retail bank in the country, thanks to a systematic charge for Peru’s underbanked population over the past years using a […]