Mexico’s industrial output grew in August by 5.8% year on year, according to the national institute of information and data (INEGI), taking increased production for the year through August to 5.5%. Cooling growth in the manufacturing sector, which expanded 5.4%, contributed towards an overall slowdown in growth, with monthly output in August down 0.06% compared with July. Manufacturing looks set to lose steam as the year progresses as a result of a drop-off in auto production; the automotive sector accounts for around 10% of industrial output. Results for auto production in September showed growth had slowed to 12% from 19.5% in August and a high of 52% in June.
Category: Regions
Posted inDaily Brief
Ecuador Run-Off Set To Polarize Nation
Ecuador is set for a run-off election on November 26 after none of the presidential candidates secured the majority necessary for a first-round win. With 63% of the ballots counted, banana magnate Álvaro Naboa surprised most analysts by taking 26.77% of the votes against 22.45% won by populist candidate Rafael Correa. The run-off is likely to highlight the socio-geographic divide in the Latin American nation, with the majority of Naboa’s support coming from middle-class voters on the coast around financial center Guayaquil and those of Correa centered on Quito. The markets were heartened by the showing of business leader Naboa, the third time he has run for president. Correa, a former economy minister, has alluded to a possible debt default should he win power, which recently has led to a sell-off in the country’s debt by some international investors. Ecuador’s voters have professed to being extremely cynical of their politicians. The country has had seven presidents in the past 10 years, with the most recent change of leader in April 2005 when former president Lucio Gutiérrez was ousted from government by Congress and replaced by an interim leader, the incumbent Alfredo Palacio.
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Peru To Sign New IMF Standby Agreement
Peru is to sign a new standby agreement with the International Monetary Fund (IMF) before the end of the year. The credit line will help the country protect itself against future drops in commodity prices, the government said. The last agreement with the Multilateral expired in July. The announcement follows President Alan García’s whirlwind tour of Washington earlier this week, which began with the first meeting so far between the “Comeback Kid” and President George W. Bush. The last time Alan García was in Washington as head of state, George Bush senior was in the White House. García also spent time in high-level talks with the IMF, the World Bank, and the Inter-American Development Bank (IDB). Peru is keen to push forward US ratification of the free-trade agreement between the two countries and the US is hoping to enlist Peru’s support in the war on drugs.
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Colombia Central Banker Upbeat
Colombia’s Central Bank believes the domestic economy may well expand by over 5.5% this year and by 4.5% next year, driven by domestic demand. The Bank’s chief executive, José Darío Uribe, speaking Wednesday at an economic forum in Bogotá, said he believed the confidence of local consumers and businessmen was high and pointed to increased private investment and consumption. In the second quarter of the year, private investment was running at 18%, public investment at 25% and domestic consumption at 5.3%, according to the central banker. Colombia’s GDP grew by 5.96% in the second quarter of the year.
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Davivienda Wins Out In Bancafé Battle
Colombia’s largest mortgage-lender Banco Davivienda won out in the battle to take over the country’s last remaining financial asset, bidding twice over the minimum price tag set by the government for Granbanco-Bancafé. The $927 million spent by Davivienda means that it becomes Colombia’s third-largest financial entity, in asset terms, behind Banco de Bogotá, and ahead of BBVA. The purchase will be part-financed via the sale of $125 million-worth of bonds as well as $175 million more capital from shareholders, including $75 million from the International Finance Corporation. The only other offer for Bancafé was received from Banco de Bogotá after foreign bidders failed to materialize by the time the offer period closed Monday. A successful acquisition by Banco de Bogotá would have made it the largest bank in Colombia ahead of Bancolombia. Bancafé specializes in corporate loans and lending to small businesses.
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Infonavit Breaks Records
Mexico’s largest, government-run, home-finance agency – Instituto Nacional de Fomento a la Vivienda ( Infonavit) – broke records Thursday when it issued $142 million-worth of Cedevis – its mortgage-backed, exchange-traded securities denominated in UDIs. This was the eighth and largest issuance yet of Cedevis by Infonavit and the issue was twice oversubscribed. The paper has a maximum term of 22 years. It was rated mxAAA/Aaa Mex by Standard & Poor’s and Fitch respectively. Infonavit expects the securities to price at a record low rate of 5.09% when they start trading on the Mexican Securities Exchange today, Friday. So far this year the Agency has placed $344.4 million worth of Cedevis in a program worth up to $551 million (6 billion pesos).
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Colombia’s Public Debt Totals $61 Billion
Colombia’s public debt, as at end August, totaled $60.96 billion, of which $39.75 billion was accounted for by domestic debt and $21.17 billion by external or foreign debt. The finance ministry is projecting total debt of around $62 billion by year-end. The ministry said that the government plans to issue a further $981 million-worth of government TES paper before the end of this year and next year will raise up to $10.35 billion via the sale of the securities, matching the amount issued in 2006.
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BBVA Colombia Bond Sale Raises $55 Million
BBVA’s unit in Colombia raised just over $55 million when it sold peso-denominated subordinated bonds Monday in the face of strong investor demand that saw bids amounting to twice what was on offer. The bank said the five-year paper would have a maximum annual interest rate of 5.35 percentage points over the IPC inflation rate. The bonds have been rated AA+ by Duff & Phelps. The bank sold $37 million worth of local bonds in August paying an annual interest rate of 5.2 percentage points over the IPC rate. The bank says the money raised will be used for working capital.
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Foreign Banks Walk On By
Despite initial interest by several foreign banks in the bidding process for Colombia’s final bank privatization, in the end none showed up with an offer for Bancafé. By close of play Monday only two sealed bids had been received – from local players Banco de Bogotá and Davivienda, surprising analysts following the sale. Santander, Citibank, and GE Money had all been expected to participate in the tender, the winner of which will be determined later this week. The government is hoping to raise $450 million from the sale of its last banking asset.
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Titularizadora Colombiana Securitization Comes To Market
One of Latin America’s largest mortgage-backed securitizations comes to the market this week, when Titularizadora Colombiana – Colombia’s answer to Fannie Mae – offers $335.4 million-worth of its residential mortgage-backed securities or TIPs (títulos hipotecarias). This is the eighth issuance by the company and is backed by a pool of mortgage loans originated by local banks BanColombia (accounting for 73.4%) and Davivienda (26.6%). The securities carry maturities of five, 10 and 15 years and a maximum coupon rate linked to the UVR rate. The government effectively guarantees, through Fogafin, those mortgages held by low-income borrowers (VIS), which comprise almost 22% of the issue. The rest of the mortgages are partially guaranteed by International Finance Corporation, which has a 21.5% stake in Titularizadora Colombiana. The securitization specialist is planning to issue a further $125 million of RMBS next month.