Venezuelan president Hugo Chavez has threatened “corrective actions” against a subsidiary of Mexican cement maker Cemex, according to a Reuters report. The news follows a wave of nationalizations by Chavez in a variety of sectors, including telecoms, steel and most recently, cement. He is reportedly ordering an inspection of the property limits of a Venezuelan Cemex plant to evaluate its impact on the environment following allegations of pollution.
Category: Regions
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Mexico Keeps Rates Unchanged at 7.25%
As was widely expected by Street analysts, Mexico’s Banxico chose Friday to keep interest rates, as expressed by the Tasa de Fondeo, unchanged at 7.25%, with the Corto at MXP79m. A 3.6% depreciation of the peso between July 23 and August 16 led some analysts to believe a hike in interest rates would be necessary, given the potential added pressure on inflation, notes Citi. But Friday’s decision confirmed more recent surveys and reports that showed a consensus for maintenance at the current rate. “Banxico states that local markets have worked normally during the period of turbulence and have even shown relatively better outcomes in comparison with other markets,” says Citi. The shop adds that it sees Banxico maintaining its view on the markets and “keeping the charted course unchanged” as it waits for global market conditions to stabilize.
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Colombia Leaves Rates Unchanged
Colombia surprised Friday by leaving the benchmark interest rate unchanged at 9.25%, following calls by a majority of analysts for a hike. The Central Bank had been widely expected to respond to a deteriorating inflation picture with a 25bp rise in rates at last week’s monthly meeting. The move was also supposed to help prop up the ailing peso. But not raising rates would leave the currency more vulnerable and make it more difficult to reach the 2007-2008 inflation target of 3.50%-4.50%, analysts said before the decision. Central Bank policy makers said they wanted to evaluate the effect of 13 increases in 16 months amid global markets turmoil. In a statement on the decision, the bank said inflation fell in July and that the economy is growing strongly.
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Jamaica Seen Paying September Maturity
Hurricane Dean may dent growth in Jamaica after it hit the south coast of the country hard, but Bear Stearns for one, anticipates no payment disruptions on external debt, including a $225m bond coming due September 1. Bear notes Jamaica’s strong willingness to pay and ample foreign-exchange reserves, at over $2bn. On the bright side, the hurricane did not devastate tourist areas, and Bear predicts tourism will recover quickly. However, the city of Kingston and other areas on the south coast sustained heavy damage, including harm to the agricultural crop and port infrastructure for bauxite. “It seems likely that the storm will cost the government some money,” says Bear.
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Marubeni Buys Back Bonds
Marubeni Caribbean Power Holdings (MCPH) has launched a cash tender offer for any and all of the $100m aggregate principal amount outstanding of 7.017% notes due 2016 issued by Mirant Trinidad Investments (MTI). MCPH acquired MTI on August 8. Bondholders tendering and giving consent by September 5 get $1,012.50 per $1,000.00 principal, including a $1.25 consent payment. Those who commit by September 19 will receive $1,011.25 per $1,000 principal. Consent is to amendments to the indenture governing, which will eliminate certain restrictive covenants and events of default and modify the provisions of the indenture. MCPH is paying for the buyback with proceeds from a new $110m credit facility. In addition to the tender offer, MTI is making a separate change of control offer to purchase any and all outstanding notes at 101% of principal plus accrued and unpaid interest to, but not including, the purchase date. The change of control offer expires September 24. ABN AMRO, Calyon, ING and Mizuho are dealer managers.
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GE Capital Beefs Up LatAm Lending
GE Capital is moving further into LatAm by starting up a structured lending group for the region. While GE has been involved in Mexico for several years working on commercial finance and leasing, the new effort will look to build up loan assets through origination and participation in syndications and keep them on the balance sheet. Target countries include Brazil and Mexico. To help the effort, GE Capital has hired Inwha Huh, former director at Deutsche Bank’s global trade finance and distribution group. She is expected to work out of New York.
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Colombia Seen Hiking Rates to 9.50%
The Colombian Central Bank will likely respond to the deteriorating inflation picture with a 25bp rate hike in its monthly meeting this Friday, according to analysts. With worsening global conditions affecting the country’s currency and inflation – the peso weakened 10% in August – the central bank should move to hike rates to 9.50%, which, with inflation at 5.20% in August, would leave real rates above 4.0%, according to BBVA. Colombia’s own domestic picture has improved, thanks to responsible management of the monetary policy, says the shop. But not raising rates would leave the currency more vulnerable and make it more difficult to reach the 2007-2008 inflation target of 3.50%-4.50%.
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Mexico Hurricane Damage Limited Thus Far
The economic impact of Hurricane Dean following its first landing on the Mexican coast has been relatively limited, though on its second landing, things could worsen. With no damage to the Cancun tourist zone and no deaths, losses were minimal, as far as Caribbean hurricanes go, though Pemex operations in the region remain closed, causing an estimated loss of $150m in exports for the oil giant, according to a Citi report that cites company projections. On Wednesday, Hurricane Dean was headed for Campeche Bay and Veracruz, with expectations that it will gain strength. Potential impacts of that are still unclear.
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Éxito Marks Colombia GDR Comeback
Colombian retailer Almacenes Éxito has raised $392m in a 144a/Reg S privately placed global depositary receipt program in the US. It became the first Colombian company to do a primary offer outside its home market in 10 years, according to JPMorgan, which is managing Éxito’s GDR program. “After a 10-year period, Colombian companies are once again looking to access capital markets outside of their borders,” says Claudine Gallagher, global head of JPMorgan’s depositary receipts group. DRs represent ownership in foreign corporations and typically trade on the US and/or European markets and settle in accordance with those market standards. Éxito’s stores sell consumer products, fresh products, apparel, home products and entertainment items.
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China to Set up Costa Rica Office
China, which is duking it out with Taiwan for control in Central America, plans to set up a representative office in Costa Rica by the end of 2007. With a presence on the ground, China’s Council for the Promotion of International Trade aims to boost trade relations between China and Costa Rica, as well as in communications between entrepreneurs of the two countries. A Chinese commercial delegation is in San Jose this week. The two countries established diplomatic ties June 1. According to China’s General Administration of Customs, trade between China and Costa Rica was $2.1bn in 2006, up 87% from 2005. Volume rose 65% rise in the first half of this year, according to the Chinese government’s website.