Following a reduction only last month of 0.25 percentage points, Mexico again cut the overnight lending rate, this time to 9.25% from 9.50%. The interest rate cut had been widely expected by analysts. Now that inflation is under control, the government is looking to boost the economy after a long run of interest rate hikes were used to slow growth over the past 18 months. Overnight rates rose from a low of 4% in August 2003 to a high of 9.75% in May this year. The government has forecast economic growth of 3.5% this year, down from the 4.4% seen last year.
Category: Regions
Posted inDaily Brief
Bolivia Offers Concession For Iron Exploration
Bolivia has put out to international tender the rights to explore jointly with the government the world’s largest iron ore deposits at Mutún. The reserves are located in the province of Santa Cruz, in the south-east of the country on the border with Brazil, and are estimated to yield at least 40 billion tonnes of iron ore. Exploration is due to start in 2009. It is thought investment of at least $500 million is needed to reach an annual production target of 1.5 million tonnes. The contract of shared risk will cover only half of the estimated reserves, with the other half held back for at least 20 years. Companies are asked to submit bids by 20 December.
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McDonalds To Sell Stake in Chipotle Grill
The world’s largest fast-food retailer, McDonalds, is to sell a minority stake in its Mexican food chain, Chipotle Grill. The company said it will offer the shares in the first quarter of 2006. McDonalds has over 30,000 restaurants in over 100 countries.
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Colombia Considers Peso-denominated Bonds
Meanwhile, Colombia may sell local-currency bonds in the international markets later this month, citing increased investor demand and the narrowing spreads between yields of the bonds sold internationally and in the local market. This will be the third peso-denominated international sale for Colombia. It sold $300 million of 10-year bonds in February and last November it issued $375 million-worth of bonds maturing 2010. Earlier this week, Brazil successfully sold $1.5 billion of real-denominated bonds to international investors.
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Ecuador’s Ex President Seeks Asylum in Colombia
Lucio Gutiérrez, former president of Ecuador has sought asylum in Colombia. He has been given leave to stay for 90 days while Colombia assesses his case. Gutiérrez says he plans to return to Ecuador shortly and branded his successor, Alfredo Palacio, a liar. The former colonel was ousted from power on 20 April this year by Congress after he dissolved the Supreme Court sparking protests in the country. In June Gutiérrez gave up his political asylum status in Brazil, granted following his exit from Ecuador.
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Colombia Cementos del Caribe To Issue Bonds
Colombia’s largest cement producer, Cementos del Caribe, part of Cemento Argos, is to issue P850 billion ($369.4 million) of bonds in the local markets. The company already has 51% market share in Colombia and is thought to be gearing up to increase investment to take advantage of opportunities in the rebuilding of the US gulf coast.
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Colombia Bank Profits Up
The profits of Colombian banks rose 29.3% to $1 billion in the first half of 2005. Most gains were seen in private financial institutions, which accounted for 77% of earnings worth $774 million, followed by state banks with 12.5% or $12.9 million.
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Mexico’s Banorte Calls Shareholder Meeting
Mexico’s fourth-largest financial group, Banorte, has called a shareholders’ meeting for 6 October in Monterrey to discuss issuing a cash dividend and increasing the bank’s capital by $488.7 million by issuing new Series ‘O’ ordinary shares. The share price rose 1.74% to P94.50 yesterday. Banorte reported second quarter net income of $190 million, up 249% on the previous year.
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Steel-producer Ternium To Buy Mexico’s Collado
One of Latin America’s largest steel producers, Ternium, has offered to buy Mexican steel group Callado for an undisclosed sum. Ternium is based in Luxembourg but controlled by Grupo Techint of Argentina. Callado had sales last year of around $437 million.
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Colombia Increased Bond Buyback To $1.1 Billion
Colombia increased its buyback of dollar- and euro-denominated bonds from $700 million to $1.1 billion. It was the largest such operation ever carried out by the sovereign. The Finance Ministry said it decided to increase the amount because of large bondholder interest. The buyback was carried out last Wednesday and was led by Goldman Sachs and Merrill Lynch.