Ecuador was due to buy back $740 million worth of its $1.25 billion 2012 global bonds, yesterday, Monday. A $400 million loan from the Latin American Reserve Fund and another $340 million from the December sale of 10-year bonds were to be used to finance the operation. Finance Minister Diego Borja expects the buyback of its highest-yielding 12% to save $20 million a year in debt payments. The country is thought likely to tap the international bond market following the buyback to raise further capital ahead of the November call date to retire the rest of the 2012 bonds. It has been authorized to issue up to $900 million.
Category: Regions
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Mexico Sells $160 Million CATs
Mexico, a country plagued by earthquakes, has sold $160 million of catastrophe (CAT) bonds to protect itself against the future cost of damage in the event of a major quake. This is the first time Mexico has issued such paper and is the first time a developing nation has tapped the financial markets in this way. The bonds, which have three-year maturities, pay 2.35 percentage points over Libor. They were offered to Mexico by Swiss Re as an alternative to reinsurance. Swiss Re also managed the sale of the bonds, alongside Deutsche Bank. CAT bonds are considered attractive by investors as they have almost zero correlation to other financial market risk.
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Televisa Still Yearns For Univision
Televisa, Mexico’s largest media group, is reportedly still hoping to take control of Univision, the US broadcaster which commands 80% of the Spanish-speaking audience in the US. Televisa, which currently holds an 11.4% stake in the US company, has allegedly been meeting with four US buyout firms and one of Univision’s directors to discuss forming a bidding consortium. Los Angeles-based Univision, which has a market value of $10.9 billion, announced in February that it was for sale. UBS is managing the sale of the company.
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Guatemala Prices Up
Guatemala’s consumer price index rose 0.82% in April, prompting fears that inflation this year may push past the 6% forecast. This would make it the third consecutive year that the country’s rate of inflation has exceeded the 4%-6% range targeted by the government’s monetary committee. Last year inflation ended the year at 8.57%, according to the central bank, Banguat.
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Comcel De Colombia To Issue Debt
Comcel de Colombia, which is owned by Mexican telco América Móvil, is to propose to shareholders that it offers up to $400 million of new local currency-denominated debt. The proposal will be made at an extraordinary general meeting on May 16. Last year, Comcel issued peso-denominated debt worth around $200 million to protect against fluctuations in the US dollar against the Colombian currency.
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Panama May Join G3
Panama has said it is interested in joining the Group of Three (G3) free trade agreement, which currently unites Mexico, Colombia and Venezuela. Earlier this week, Venezuela’s president, Hugo Chávez, announced that he was considering withdrawing his country from the G3 trade bloc in favor of greater integration with countries in the south of the region. Mexico has said it would support the addition of Panama.
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Bolivia Plans Further Nationalization
Bolivia’s president, Evo Morales, has said that further nationalization of his country’s natural resources is planned. Speaking in Vienna, where he is attending the EU-Latin America/Caribbean Summit, Morales said that his government’s agrarian reform package will ensure that the state takes back “unproductive” land from private landlords and will redistribute up to 14 million hectares of land to indigenous groups and farmers. According to minister of planning, Carlos Villegas, the government will unveil details of the reform package at the end of May.
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Mexico Inflation Falls
Mexico’s annual inflation fell slightly in April, to 3.2% from 3.41% in March. The rate is now approaching record low levels last seen in November and has led to speculation by some analysts that there may even be room for further interest rate cuts later in the year. However, core annual inflation, which excludes food and energy prices, is actually on the rise – it registered 3.2% in April against 3.04% in March – driven by the construction boom and growing demand for materials. In addition, any rise in US Fed rates, leading to a tightening in the spread between Mexican and US rates, will leave less room for Banxico to cut.
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Central America Talks Trade With EU
Central American leaders are set to have trade talks this week with the EU at the EU-Latin American/Caribbean Summit being held in Vienna. The heads of state met in Costa Rica Monday as the guest of newly inaugurated president Oscar Arias to discuss a broad range of themes in advance of attending the Summit in Austria. One of the themes will be an Association Agreement between Central American and the European bloc that includes a free trade treaty.
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Bolivia Appoints New Oil Chiefs
The Bolivian government has appointed the new directors that will sit on the boards of the country’s five newly nationalized oil concerns. The new directors will represent the state-owned oil company Yacimientos Petroliferos Fiscales Bolivianos (YPFB). Each company’s board will comprise four state-appointed directors and three from the foreign oil companies that now own a minority stake. The government has also named the five government agents, syndics, responsible for each concern. These are: Santiago Berríos at Andina (Repsol YPF); René Rocabado at Chaco (BP); Felipe Hurtado at Transredes (Enron and Shell); Jorge Suroco at Petrobras’ refinery and Federico Yáñez at CLHB (Petrobras).