Category: Peru

After catching the market by surprise last week with a 25bp rate hike to 1.50%, Peru’s central bank says more tightening is not imminent. “The increase in the rate is preemptive in nature as clear indications of increasing activity, against a backdrop without inflationary pressures, allows for a reduction of monetary stimulus,” the bank says. It adds that future hikes will depend on inflation. Annual inflation stands at 1.85%, within the target range of 1.00%-3.00%. Goldman Sachs believes the decision is acceptable or understandable given its preemptive nature. It expects to see the policy rate at around 3.00%-3.25% by end 2010 and 5.00% by July 2011.

Peru’s central bank is expected to keep rates at 1.25% today, according to market consensus. Morgan Stanley’s and Roubini Global Economics’ forecasts are in line with consensus, as inflation remains low. Bank of America Merrill Lynch also agrees, saying that it expects Peru to begin a tightening cycle in July, although it may tighten reserve requirements before that to limit currency appreciation.

Peruvian gas distributor Calidda is getting a $50m loan from the IFC to help provide gas connections to more that 45,000 households. The financing is part of a $135m package which also involves CAF. The funding will help Calidda expand capacity of its distribution network from 255m cubic feet to 420m cubic feet a day. This funding will support implementation of Calidda’s $200m investment plan for the next 4 years. The IFC is not disclosing terms of the loan, saying only that it is a long-term.

Peru plans to use $66m from its cash stockpile to fund last week’s bond buyback, the finance ministry says. It will refund this amount by selling domestic or external bonds at a later date when market conditions are acceptable. The sovereign agreed to exchange $1.80bn in 4 series outstanding global 2012-2016 bonds for $1.26bn in reopened 8.75% of 2033 notes and $500m cash, following the conclusion of an exchange offer. Proceeds from previous domestic bond sales are being used to meet the bulk of the $500m cash component, the ministry says.

Transportadora de Gas del Peru sold up to $150m in 15-year bonds on the local market. TGP sold $100m of bonds priced at 100.0 with floating rate of 3.375% over 3-month Libor. Total demand for this tranche was $235m. It also sold another tranche of $50m priced at 100.0 with a fixed rate of 7.25%. Total demand was $50.9m. Proceeds from the sale, rated AAA on a national scale, will help fund expansion and upgrade to TGP’s natural gas and liquid natural gas network. BCP is managing the sale, the first from a $400m shelf.

Peru has agreed to exchange $1.80bn in outstanding global bonds for $1.26bn in reopened 8.75% of 2033 notes and $500m cash, it says, following the conclusion of an exchange offer launched last week. The sovereign had offered to swap $3.36bn in outstanding 2012, 2014, 2015 and 2016 bonds, for the 2033s or cash capped at $500m. Following the offer, there are $312.2m outstanding in the 9.125% of 2012 dollar notes, EUR290.7m in 7.500% of 2014 euro notes, 278.5m in 9.875% of 2015 dollar notes and $581.1m in 8.375% of 2016 in dollars. Barclays and HSBC managed the transaction.

Transportadora de Gas del Peru is set to sell up to $150m in bonds on the local market today. TGP will auction fixed rate and floating rate bonds linked to Libor, at a 15-year maturity featuring a 5-year grace period, according to an official at the company. Proceeds from the sale, rated AAA on a national scale, will help fund expansion and upgrade to TGP’s natural gas and liquid natural gas network. BCP is managing the sale, the first from a $400m shelf.

Peru power producer and distributor Maple Energy has signed a $140m senior secured debt financing with multilaterals and Interbank for a $254m ethanol project. Maple subsidiaries, Maple Ethanol and Maple Biocombustibles are the primary obligors for the $140m loan. It consists of a $65m senior secured construction and term loan from CAF, a $25m loan FMO and a $25m facility from the IDB, as well as $25m from Interbank. The loans from multilaterals are due 2022 and pay Libor plus 6% per annum, interest only for the first 30 months. The borrowers have the option to convert a portion of the loans from the IDB and FMO to fixed rate once during the term. After physical completion of the ethanol project, borrowers will also be required to make certain cash payments to the lenders in the form of cash sweep and upside interest payments. The cash sweep is a mandatory prepayment of the multilaterals’ loans at an amount equal to 30% of the borrowers’ cashflow available after debt service payments. In addition, borrowers will be required to pay upside interest of 6.5% of their cashflow available after debt service. Commitment fees are payable semi-annually, equal to 0.5% per annum of the undrawn amounts of the loans to multilaterals. The $25m Interbank loan due 2020 pays a fixed 10.75% per annum, interest only for the first 24 months, plus a 50bp annual of the undrawn amount commitment fee. The loan is in addition to equity contributions of $105.5m from Maple, including approximately $68.0m in capital contributed to date and a $8.5m facility primarily related to value-added taxes. The plant, on the northern coast of Peru, is scheduled to start commercial operations during Q2 2011.

Peru is looking to push out maturities through the launch of an exchange offer for $3.36bn equivalent in dollar and euro bonds. The offer expiring April 14 targets holders of the 9.125% of 2012 in dollars, 7.500% of 2014 in euros, 9.875% of 2015 in dollars and 8.375% of 2016 in dollars, according to a prospectus. Those accepting will have their choice of reopened 8.75% of 2033 dollar bonds, or cash. The sovereign has capped the cash payment at $500m, with disbursements prorated in the event the limit is exceeded. The exchange spreads and reopening spread for the 2033s will be assigned at the close of the offer, with results announced April 15. Barclays and HSBC are managing the sale.