Augustín Carstens, Mexico’s new finance minister, announced further appointments to his team at the finance ministry Monday. Carstens will be joined by three deputies: Alejandro Werner, formerly chief economist replaces Alonso García Tames as deputy minister. Ernesto Cordero becomes deputy minister in charge of spending, and Fernando Sanchez Ugarte was named deputy minister for income. Gerardo Rodriguez stays on as head of public credit.
Category: Regions
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CentAm Sovereigns Return 10.85% YTD
Central American and Caribbean sovereign debt returned 1.53% in November, giving the region a 10.85% gain year-to-date, according to Bear Stearns. Belize, Bahamas, and Grenada outperformed in very thin trade, while Panama and El Salvador also did well. Bear Stearns has upgraded El Salvador to marketperform in its portfolio and keeps Panama at marketperform, both due to valuation considerations. It also cut Trinidad and Tobago to marketperform from outperform, following strong gains and based on expectations of more sovereign supply. “Domestic interest rates are due to rise further, potentially decreasing the attractiveness of the U.S. dollar external debt, at least on the margin,” said Bear, of T&T. In general, the shop views the region’s fundamentals as quite solid.
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Credit Suisse Recommends Colombia FRN Switch
Credit Suisse is recommending investors switch out of Colombian FRN 2015s into the more liquid 2017s to take advantage of current levels. Recent allegations of paramilitary links to allies of president Alvaro Uribe have caused Colombian spreads to widen and the 2015s to outperform. However, Credit Suisse analysts believe that if “allegations regarding Uribe quiet down and Colombia spreads tighten back to previous levels, the ’15s are likely to underperform”.
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Calderón Takes The Reins
Mexico’s new president, Felipe Calderón, was inaugurated Friday in a ceremony kept short by recent protests from opposition lawmakers in Congress who threatened to disrupt the day. Calderón inherits a country with escalating social and political tensions and analysts are watching to see what line he takes regarding law and order. One of his first acts was to sign an austerity decree which will, reportedly, save the country $2.3 billion in spending next year. The decree allows for a 10% cut in the salary of the president and other government ministers. The president also designated former energy minister Jesús Reyes Heroles González as the new head of state-run oil company Petróleos Mexicanos (Pemex).
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Honduras Awards Fuel-supply Concessions
Honduras has awarded two of its international fuel-supply concessions to Conoco Phillips of the US and Mexico’s Gas del Caribe. From the start of next year, Conoco Phillips will supply gasoline and diesel, while Gas del Caribe will provide LPG to meet Honduras’ fuels needs in these areas and save the country around $55 million, according to the government. Concessions to supply kerosene, aviation fuel, and bunker were not awarded. The government will now have to negotiate with oil companies currently operating in the domestic market, such as Texaco, Esso, Shell and local firm Dippsa to rent storage and distribution facilities. The multinationals will be given notice of the date by which they must stop importing fuel to the country and are likely to file for compensation against the government.
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Mexico Brings Down Public Foreign Debt To $53.2 Billion
Figures released by Mexico’s finance ministry Thursday show that the country has brought down its public foreign debt, since the end of last year, by $12.5 billion to $53.2 billion as at October. Meanwhile, net public domestic debt rose by 152.5 billion pesos ($13.9 billion) during the same period as the government set about its program of exchanging foreign for domestic debt. The changes in its debt profile will help protect Mexico against external shocks.
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Correa Starts To Outline Plans
Ecuador’s president-elect, Rafael Correa, said he believes the country’s debt servicing payments need to be lower, but as yet has given no details as to how this will be achieved. Investors nervous of a full debt default by Ecuador have been selling off the country’s foreign bonds in recent days. However, not all investors believe a default is inevitable. JP Morgan in a research note Tuesday said it believed that, once in office, Correa would prove a pragmatist on the issue of foreign debt servicing and said it would be watching with interest as the first coupon payment on foreign debt comes due on February 15. Correa has confirmed that economist Ricardo Patiño will serve as his economy minister when he assumes the presidency on January 15. Also appointed are Alberto Acosta as energy minister and Carlos Pareja as president of state-run oil concern Petroecuador. Correa also said that his new government would start to renegotiate contracts with foreign oil companies from January, although he gave no details as to how royalty payments might be altered.
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Calderón Names Foreign, Interior Ministers
President-elect of Mexico, Felipe Calderón has named four more members of his team. His new interior minister will be Francisco Ramírez Acuña, a loyal supporter of Calderón, while Patricia Espinosa will become foreign minister. Ramírez Acuña was until recently governor of the state of Jalisco; Espinosa is a career diplomat. One of first challenges facing Calderón when he takes over on December 1 will be the tempestuous state of affairs in Oaxaca where protestors continue to demand the resignation of the state governor. Other appointments were Germán Martínez as comptroller general, and Juan Camilo Mouriño as head of a newly created office of the presidency.
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Mexico Completes External Debt Swap
Mexico Tuesday successfully swapped €493.8 million ($651 million) of euro-denominated foreign debt for domestic debt, with the exercise of its (XWE) series of warrants enabling investors to exchange the securities (UMS bonds) for peso debt (M bonds). Warrant holders exchanged euro-denominated bonds maturing 2008 to 2017 for 8.59 billion pesos of local-currency bonds due 2023. This is the last of four swaps that have seen Mexico exchange around $3 billion of foreign-currency debt for peso-denominated debt. Last November, Mexico sold three series of dollar warrants to enable investors to swap $2.5 billion of dollar-denominated securities for peso debt. Then in March this year, the sovereign sold warrants to swap euro-denominated bonds with a nominal value of €494 million into local-currency bonds due in 2023. Mexico is hoping to bring down its foreign debt-to-GDP ratio to around 6% by the end of this year from around 12% in 2000.
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Rinker Rejects Cemex Offer
Australian building materials group Rinker has formally rejected the $11.7 billion bid (A$16.84 per share) by Mexican cement producer Cemex. In a press release issued this morning, Rinker’s board unanimously recommended to shareholders they reject Cemex’s offer, saying it was “opportunistic” and “far too low”. According to Rinker, the company has been valued by an independent expert at between A$20.58 and A$23.04 per share. Analysts expect Cemex to increase its bid.