Spain’s Grupo Editorial Planeta has taken a 55% stake in Colombia’s El Tiempo media group. An editorial in Friday’s El Tiempo describes the deal as more of a broad strategic partnership than a takeover. El Tiempo is Colombia’s leading daily newspaper and has been going since 1911.
Category: Regions
Posted inDaily Brief
Infonavit Plans to Target US Investors
Mexico’s largest, government-run, home-finance agency – Instituto Nacional de Fomento a la Vivienda ( Infonavit) says it plans to tap the US market, despite the gloomy market conditions for mortgage-backed securities. The agency – which has so far placed MXN16.4bn of its mortgage-backed Cedevis in Mexico, representing about 39% of all such paper issued in the market – is keen to lure investors from beyond the Mexican borders. The proposed transaction is still subject to permission from the US Securities and Exchange Comission. Grupo Financiero Banamex is advising Infonavit on the US sale.
Posted inDaily Brief
CentAm/Caribbean Buffeted by EM Storm
Central American and Caribbean sovereign debt lost 1.15% in July, taking them to a year-to-date return of 1.56%, according to Bear Stearns. This was less the 2.83% July loss in the LatAm component of the EMBI+, which tracks the bigger sovereigns, and proves that this region is still a relatively safe haven. However, the problem for investors trying to get out during the global storm is a lack of flow. “Liquidity in this sector has declined to very low levels, according to our trading desk,” says Bear, which is one of the few shops that makes markets in the region. “Investors, generally speaking, are not selling the smaller credits at times like these, but buying is also very muted. Indeed, CDS contracts may be more liquid than cash bonds, which is not common in the Central American and Caribbean credits,” adds Bear. The shop maintains that economic fundamentals are still solid, and blames the rout on hedge fund deleveraging and fear of redemptions among other things. “Credit trends in the emerging markets, including the Central American and Caribbean region are, in our view, unambiguously improving,” says the shop.
Posted inDaily Brief
NGC Puts New Money Deal on Ice
National Gas Company (NGC) had been planning a return to the international capital markets in the third quarter. But Daniel Sankar, the Trinidad and Tobago gas merchant’s vice president of finance and information management says this has been put on hold because of revised project needs. “We are not planning any new debt for 2007,” Sankar tells LatinFinance. “The big spending will not be done until next year.” NGC typically funds projects 20% with internal resources, and Sankar says there is cash on hand for current projects. A $200m-$300m issue with a 15-year average life had been expected to hit the market. “We are still looking at it,” adds Sankar. A reopening of a $400m 2036 bond issued in early 2006 through Citi and Lehman was being considered. The decision to hold was made before the current volatility.
Posted inDaily Brief
Bear Raises Panama, Cuts Costa Rica, Barbados, T&T and Grenada
Bear Stearns has reshuffled its CentAm/Caribbean portfolio and predicts that market sentiment will change. The shop upgrades Panama and reduces exposure to Costa Rica, Barbados, T&T and Grenada. “If [sentiment] improves, countries like Belize, whose global bond is trading in the mid-70s in US-dollar terms, are likely to catch a bid, as are countries whose fundamentals are improving rapidly, such as Panama,” says Bear. The move up to outperform for Panama is based on better-than-expected numbers, and Bear concedes that the call may be early and dependent on the overall market.
Posted inDaily Brief
Peru Inflation Rises, May Hike Rates
Inflation numbers out this week put pressure on Peru to raise rates Thursday. Higher prices of food and fuels and strong domestic demand growth are fueling inflation. “Given the large inflation surprise and confirmation that inflationary pressures have intensified, we believe the Central Bank is likely to raise the reference interest rate again [today], by 25bp to 5.00%,” says Goldman Sachs.
Posted inDaily Brief
S&P Mulls Bahamas Upgrade
S&P has revised its outlook on The Commonwealth of The Bahamas’ single A rating to positive from stable. According to S&P credit analyst Olga Kalinina, the ratings reflect the Bahamas’ macroeconomic stability, prudent fiscal policies, and steady monetary stance. “The Bahamas’ political environment is stable, and its standard of living is high. Public sector external debt is low and declining, with net external assets at 8% of current account receipts in 2007,” she adds. Economic growth, is expected to pick up and stabilize at about 4% in the next three to five years, reflecting investment projects in the tourism industry. Estimated at over $10bn, committed and already-started projects should provide positive externalities to a wider economy, supporting S&P’s expectation of improving sovereign creditworthiness.
Posted inDaily Brief
Citi Bullish on Peru Banks
Peruvian banks have the most exciting industry dynamics in LatAm, says Citi, which has initiated coverage of Credicorp (buy/medium risk) and Intergroup (hold/medium risk). The bank says Peru has Asian levels of GDP growth combined with US levels of inflation, “creating almost the ideal macroeconomic backdrop for financial services to flourish and develop rapidly.” Meanwhile, penetration of deposits and loans in Peru is among the lowest in the EM, suggesting high sustainable growth for Peruvian banks for years to come, Citi adds. In addition, the late 1990s banking crisis prompted a cleanup process that deepened the concentration level in the Peruvian banking sector, which bodes well for ROE. “Peruvian banks have re-emerged with good asset quality, world-class profitability, adequate capitalization, excellent liquidity, and low vulnerability to shocks. In addition, the sector now enjoys one of the best preventive supervisory systems in the region,” says Citi.
Posted inDaily Brief
Banxico Keeps Growth Forecast at 3%-3.5%
Mexico’s Central Bank, Banxico, has kept its forecast for economic growth this year at between 3% and 3.5%. The prediction is similar to that of the finance ministry which anticipates GDP expansion of 3.3% in 2007. Second-quarter GDP figures will be released on August 16; they are expected to be around 3%.
Posted inDaily Brief
China Boosts Copper Prices
Bullish for the overall LatAm macro story is consumption from China, particularly of raw materials. Barclays says copper supply disruptions in Chile, Mexico and Peru have helped keep prices high, but longer term, Chinese consumption will be the driver. “In Chile, although disputes have hit a wide range of Codelco and non-Codelco operations, stoppages have been brief and we estimate total losses of less than 25,000 tonnes over the past two months,” says Barclays. It adds that the main supply side risks are the ongoing negotiations at SPCC’s operation in Peru, with 375,000 tonnes a year of mine output at risk, and a strike at Grupo Mexico’s 360,000 tonnes a year mines in Mexico. Barclays predicts both will be resolved before too long.” The real story in copper this year has been the resurgence in copper demand in China – which is the main contributor to what is already looking like another very strong year for copper demand,” the shop says. “Anticipation of a resurgence in Chinese buying of copper may be enough to tighten copper market fundamentals and keep prices supported over the coming months, but recent production losses are not,” it concludes.