Category: Regions

Mexico’s Central Bank, Banxico, has held the benchmark lending rate at 7% for a further month following signs that inflationary pressures are easing. Core inflation for the first half of March fell slightly from 3.95% as at end-February to 3.87%, said the Bank. Last month, Banxico said it could well tighten monetary policy should core inflation continue to rise and spill over into the wider economy.

Building on recent funding in Hong Kong and Taiwanese dollars, yen and Mexican pesos, CABEI is considering a debut Malaysian Ringgit bond deal. The bank plans to lend to projects worth roughly $4 billion this and next year, up from $2.4 billion in 2006. Of that, less that $1 billion is for its own portfolio, CABEI president Harry Brautigam tells LatinFinance. The funding requirement is around $1 billion this year. Projects in the pipeline for the multilateral include infrastructure projects, creation of a regional mortgage market and a Central American clearing and settlement system to boost regional trade, and funding for eco tourism. The multilateral is also in the market for a CFO, now that Nick Rischbieth has moved up to vice president.

Mexican cement giant Cemex has extended its bid deadline once more for building materials firm Rinker, from March 30 to April 27. This is the third time the company has extended the offer period. Cemex made a hostile takeover bid worth $11.7 billion last October for the Australian company, targeting Rinker’s valuable US business. However, Rinker’s board rejected Cemex’s offer saying it was “opportunistic” and “far too low”.

Comerci, the Mexican retailer, is expected to price today, Friday, up to $250 million in 20-year global bonds to be denominated in Mexican pesos. Merrill Lynch is the lead.

Mexico has initiatives in place that should stimulate a fully functioning repo market in the second half of 2007, Gerardo Rodríguez, Mexico’s deputy undersecretary for public credit tells LatinFinance. “Repo and securities lending markets are perhaps the one and only missing link in terms of market development, so that we can say with confidence that we have a complete local debt market,” says Rodríguez. Mexico has started a program to financially reward market participants engaged in repo and securities lending activity and penalize those who are not. There are several parallel initiatives, including making insurance companies provision for securities lending. Afores are getting clarification from Consar on limits and how to trade repo, while withholding tax exemptions for foreign investors are being stated. “Everything is happening in the short term,” says Rodríguez. “This package we are working on together with the central bank should be enough for the market to finally take off,” adds the official. To get secondary corporate trade off the ground, Rodríguez says that in his personal view, sorting out operational and legal impediments to foreign participation should take priority. This includes making local debt deals euroclearable and registered overseas. The 4.9% withholding on overseas involvement in corporate trade is unlikely to be lifted any time soon. “Tax issues in financial markets tend to be over-evaluated,” says Rodríguez. He also tells LatinFinance that the pension fund reform making its way through congress this week will save Mexico 20 points of GDP on an NPV basis.

Comerci, the Mexican retailer, will launch a $200-$250 million 20-year international bond to be denominated in Mexican pesos. Roadshow dates are set for March 20-22. Merrill Lynch will be leading the offering.