Mexico is to build on its extended peso yield curve by issuing more of its longer-dated, benchmark, securities and withdrawing further sales of its seven-year fixed-rate paper. The finance ministry said the government was planning to sell $3.5 billion pesos ($330 million) of 30-year local-currency bonds this quarter, following the successful initial sale of the debt last October.
Category: Regions
Posted inDaily Brief
Panama Banks Merge
Panamanian banks Banco General and Banco Continental have said they are to merge and create a new financial entity – BG Financial Group – with the banks having a 61:39 ownership, respectively. The new local giant, which will be born from Banco General absorbing Banco Continental, will become one of the largest financial groups in the region. With more than $7 billion in assets, it will have the muscle to take on the large foreign players who are piling into Central America. The board of BG Financial will comprise eight directors from Banco General and four from Banco Continental. Last year, HSBC paid $1.7 billion to buy local Grupo Banistmo, the largest bank in the region.
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Ecopetrol Takes Stake In ISA
Colombian state-run oil producer Ecopetrol has taken a 5.78% stake in state-controlled electricity distributor Interconexión Eléctrica SA (ISA) after exchanging its shares in local firm Transelca. In return, ISA gains control over electricity transmitter Transelca by taking over Ecopetrol’s 34.99% holding in the company which serves Colombia’s Atlantic coast. ISA was partially privatized in 2000 and has become a key regional player in the sector, expanding into Panama, Peru, Ecuador, Bolivia and Brazil.
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HSBC Appoints Gil Diaz Director
Former Mexican finance minister José Francisco Gil Diaz has been appointed a director of HSBC. Gil Diaz, who will serve as an independent non-executive director, was Mexico’s finance minister until November 30, last year. Prior to this, he was chief executive of Mexican telco Avantel, from 1997 to 2000. He has also served as vice-governor of the Central Bank of Mexico where he was a director of economic research, director general of tax policy and member of the board of governors.
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Correa Continues To Keep Debt Hand Hidden
Ecuador’s incoming administration under Rafael Correa, which takes over January 15, continues to keep its options open with regard to the country’s external debt, according to economy minister-elect Ricardo Patiño. Repeated questioning regarding a possible debt restructuring or even default has been met with non-committal from Correa and his team which has limited itself to emphasizing the burdensome nature of the debt servicing. This may be a calculated move to increase investor worries, say some commentators, and retire some of the higher-paying debt at a low price. They point out that Ecuador’s global 2012 bonds – the sovereign’s most expensive debt – carry a call option. Ecuador has $510 million of global bonds due 2012 outstanding, $650 million of bonds due 2015 and $2.7 billion of globals due 2030.
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Colombia 4.48% Inflation Within Target
Colombia’s cumulative inflation rate for 2006 was 4.48%, with consumer prices increasing 0.23% in December, driven by price rises in transport and costs of entertainment goods and services, according to DANE, the national statistics agency. Annual inflation in 2006 was within the 4% to 5% range targeted by the government and compares with the rate of 4.85% posted in 2005.
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Bolivia’s Nafibo To Become Development Bank
Bolivian state-owned Nacional Financiera Boliviana (Nafibo) is to become a development bank. A government decree issued January 1 approved the entity’s conversion to a second-tier bank to support the productive sector of the economy. The bank will start operating this month with $40 million of capital to support small producers who are unable to access traditional, commercial bank lending. The bank will be able to finance infrastructure projects, provide technical assistance and technology transfer, among other things.
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Peru Closes Transmantaro Sale To Colombian Utilities
Peru’s investment promotion agency ProInversión has closed the sale of the state’s remaining 15% stake in local electricity transmission company Consorcio TransMantaro to two Colombian utilities. Colombia’s largest energy provider, state-controlled Interconexión Eléctrica SA (ISA), together with state-owned Empresa de Energía de Bogotá (EEB), bought the remaining government stake in auction in September for $17.7 million, topping the minimum price of $15.2 million set by the government. The Colombian companies went on to pay $33 million in November for the final 28% stake outside their control owned by Canadian Fonds de Solidarité des Travailleurs du Quebec de Canada to take a 100% stake in the Peruvian utility.
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Ecuador External Public Debt At 25.3% Of GDP
Ecuador’s external public debt as a percentage of GDP fell slightly as at end-November last year to 25.3%, totaling $10.3 billion. This compares with $10.8 billion or 29.7% of GDP as at the end of 2005, and is down from $11.5 billion or 42.3% of GDP in 2003. President-elect Rafael Correa, who takes over on January 15 has talked of a debt restructuring and possible default along the lines of that carried out by Argentina in 2002. Ecuador pays high interest to service its debt – equivalent to 6% of GDP – and its bonds carry junk rating. Meanwhile, Ecuador’s country risk rating rose to 854 points as at December 26.
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Palacio Sacks Economy Minister Jouvín
Ecuador’s president Alfredo Palacio, who will step down on January 15 to make way for president-elect Rafael Correa, has sacked economy minister José Jouvín. Labor minister José Serrano will take over the portfolio until the new government assumes power when the job will go to Ricardo Patiño. Jouvin was the fifth economy minister to serve under Palacio since he took office in 2005 in place of ousted president Lucio Gutierrez. Interestingly, Correa was Palacio’s first economy minister. Jouvín had only been in the job since October after he took over from Armando Rodas.