Colombia’s government moved to stem inflation on Monday by raising commercial banks’ reserves on customers’ deposits, which in turn will curb retail lending. The banks will now have to send 27% of new checking account deposits, 12.5% of savings accounts and 5% on CDs with maturities less than 18 months, up from levels of 13%, 6% and 2.5% before. In another measure aimed at damping down the economy, the Bank is imposing a 40% deposit requirement on all corporate and government external borrowing to slow down the inflow of dollars.
Category: Regions
Posted inDaily Brief
Peru To Reopen Local 2020s
Peru’s finance ministry announced on Monday that the sovereign is planning to reopen its local 2020 bonds to sell a further 280 million soles ($88.5 million). Last month Peru raised 360 million soles ($113 million) from the tap of two of its local-currency bonds. The sovereign sold 270 million soles in 2026s to yield 6.14% and 90 million soles in 2046s to yield 3.25%. Demand for the paper was 448 million soles and 274 million soles, respectively. The government is authorized to sell up to 2.33 billion soles of local-currency paper this year.
Posted inDaily Brief
Suramericana Struggles
In another sign that the bank market may be turning against borrowers – albeit only slightly – a deal for Suramericana de Inversiones is faltering. The Colombian investment company that owns shares in Bancolombia and Grupo Nacional de Chocolates is struggling to raise a $150m 3-year loan. The facility, described as a holding company deal backed by shares, launched at 75bp over Libor, a price many non-participants said was too tight. That figure could still be adjusted, say bankers. The deal went out to MLAs at the start of April and was expected to be completed by May. But as of Monday, lead arranger Citi still had the books open. Competing bids for the mandate are heard to have come in at between 5bp-30bp wide to the 75bp level.
Posted inDaily Brief
Colombia Raises Funds for Buyback
Colombia has sold $1.12bn worth of new peso-denominated bonds to fund the buyback of existing debt. The new TES bonds, maturing in 2009 and 2023, will mostly pay fixed rates of between 9.80% and 10.35%.
Posted inDaily Brief
Isagen Sale First-round Brings In $229m
Colombia’s government has pulled in $229m (473m pesos) from the first round of its privatization of power generator Isagen, which it put on the block for the country’s “social groups” at the end of February, in accordance with Colombia’s privatization laws. The government is hoping to capture around $262 million via the IPO of 20%, or 2.44 million shares, of Isagen, more than double its original estimate. It had set a minimum price per share of 1,130 pesos ($0.50). A second round of the share sale will open on June 2 and will be open to local and foreign investors alike.
Posted inDaily Brief
Crime Hinders Caribbean Development
A recent World Bank report finds that high levels of crime and violence threaten Caribbean growth and prosperity. In many countries, as crime increases, access to financing declines; spending on formal and informal security measures increases; and worker productivity drops. Reducing the homicide rate in the Caribbean by one third could more than double the region’s rate of per capita economic growth, the report estimates. Drug trafficking has driven murder rates in the Caribbean to the highest per capita in the world, and assault rates are significantly above the world average.
Posted inDaily Brief
Ecuador Looks at Financial Sector
Meanwhile, in Ecuador, President Rafael Correa, has warned financial institutions that he will intervene if they do not bring down the level of interest rates used. Correa said he will use the courts if necessary to achieve his aim
Posted inDaily Brief
VW to Launch Mexican Bank
The Mexican subsidiary of German car manufacturer Volkswagen is planning to launch a bank in Mexico although it has yet to lodge a formal request for authorization. The proposal to launch a bank follows recent moves by local retailers to open up their own banking units and stimulate competition.
Posted inDaily Brief
EEB Takeout Bonds Coming In June
Colombia’s EEB is expected to come to market with $1.1bn or more in dollar-denominated bonds in June, Jorge Barragan, the company’s CFO, tells LatinFinance. The company took out a 9-month $1.46bn loan led by ABN AMRO earlier this year to acquire Ecogas. While most of the takeout will take place in the bond market, some of the bridge financing will also be syndicated, says Barragan. The Dutch bank is sole lead.
Posted inDaily Brief
S&P Raises Panama Outlook to Positive
S&P also hiked its outlook on Panama’s BB rating to positive from stable. This reflects “the likelihood of an upgrade if recent improvements in fiscal performance endure, economic diversification continues to boost real GDP growth, and the planned expansion of the Panama Canal can be financed in a manner that does not unduly burden government finances, either directly or as a contingent liability,” says S&P. It anticipates a further decline in net general government debt from the current 38% of GDP. Panama could be upgraded following additional evidence of fiscal consolidation, clarification of the fiscal framework (namely, pending reform of fiscal responsibility law), and definition on the size and strategy for financing expansion of the Panama Canal.