Category: Peru

Peru followed through with plans to pay down $838m worth of Brady debt Friday. The sovereign eliminated its outstanding amounts FLIRBs, PDIs and Discount bonds, Jose Miguel Ugarte, head of public credit, tells LatinFinance. Peru used $685m worth of proceeds from peso-denominated sovereign issuances at the end of last year to pay down the notes at par. It also used $153m from the Treasury to pay the balance, says Ugarte. The process eliminates virtually all of Peru’s Brady debt. The country still has about $50m in Par bonds that are trading at 85, which it chose not to call. Having received news of the plans to pay down the debt earlier this year, markets didn’t react to the move Friday, says one Andean strategist. The strategist notes that in general, however, the move is a welcome development that is part of Peru’s overall positive story.

Peru’s Scotiabank is looking to raise $200m through a 5-year amortizing loan. The deal through Citi includes a 2-year grace period with seven ensuing semi-annual installments. The margin is heard at 120bp over Libor, say bankers away from the deal. The deal was launched the same day Peru’s Interbank announced a $200m 3-year step up loan via Standard Chartered. That deal will offer Libor plus 80bp in year one, 85bp in year two and 95bp in year three. Earlier this year, Banco de Credito del Peru raised $410m in an upsized and repriced 3-year step up loan at 70bp, 75bp and 85bp over Libor.

Scotiabank has informed the Peruvian authorities and Grupo Altas Cumbres (GAC), the parent company of Banco del Trabajo that it will not be exercising its option to acquire shares in the Peruvian bank, the shop announced. The Canadian bank already has a presence in the Andean country through retail banking and other financial services.

American developers Kelley International and Ichor LNG and Peruvian sponsor Inversiones Wineca have closed an $82m 6-year construction loan for the Irradia land-based LNG project outside Lima. Lead WestLB brought in two banks to the private syndication, and seeks to bring in up to two more. The 300,000 gallons-per-day plant will receive natural gas from the Camisea pipeline, and liquefy it for distribution via trucks to industrial users who lack pipeline access. The $102m project is the first of its kind in LatAm, following similar facilities Kelley has built in the US, say the leads.

Peru’s central bank is expected to keep the overnight rate at 5.25% after its monthly board meeting Thursday, despite the high probability that February’s inflation could be higher than forecast, according to Citi. The shop sees food likely to affect Peru’s inflation more than in other countries, given that it accounts for 47.5% of the CPI basket, versus a 26% regional average. This has the potential to encourage generalized inflationary pressures and will likely reduce the probability of reaching the inflation target this year. Citi believes that the likelihood of a rate hike in the next meeting is small, but does not rule out additional measures in the coming months.

WestLB is expected to arrange financing for the $106.1m Carhuamayo-Carhuaquero transmission line to be built by Abengoa Peru, according to a banker with knowledge of the project. The government awarded the Peruvian unit of Spanish utility Abengoa a 30-year concession to build and operate the 700km line Tuesday, and WestLB backed the bid. No details regarding the makeup of the financing have emerged. The line will become part of the “Longitudinal Trunkline of the Sierra,” starting in 2010 to transport gas-fired and hydroelectric generation from the country’s center to mines in the north.

Peru’s government has authorized $253.5m to be used to repurchase Brady bonds. The finance ministry plans to redeem up to $838.3m in FLIRBs, PDIs and discounts March 7. The finance ministry plans to raise the $253.5m by placing sovereign bonds domestically. It is waiting for a window of more favorable market conditions before pulling the trigger.