Category: Peru

Titulizadora Peruana, the securitization shop being set up with the help of the IFC, is set to open its doors by the end of February and will look to price its first deal in June, Enrique Oliveros, general manager, tells LatinFinance. The offering backed by dollar-denominated mortgages will include a senior tranche of up to 15 years, as well as a smaller junior piece. The fixed rate notes could potentially come in the 6.0%-6.5% range, says Oliveros, though pricing will be determined during the bookbuilding process in June. BBVA Continental issued in December what is considered to be Peru’s first MBS deal, $23.75m in sol-denominated 8-year notes at 6.75%.

Compania de Minas Buenaventura, Peru’s largest publicly-traded precious metals mining company, says it has completely unwound its gold hedge book by releasing the fixed price of 782,000 gold ounces committed for years 2010 to 2012. Total payment for the transaction was $434m, which Buenaventura says will be financed via debt. The miner already eliminated 140,000 ounces from its 2010 gold commitments by paying $82.6m in cash last month. “After reducing the gold commitments in both transactions, which totaled 922,000 ounces, Buenaventura is now completely un-hedged,” says the firm.

Lima-based bankers continue to chatter about a sale of Banco de Credito del Peru to Santander, which the alleged target continues to deny. A $1.3bn price is rumored for a 60% stake in the bank and Santander president Emilio Botin is said to be making his way over to Lima next week. “There is absolutely nothing to date on any sale of the bank,” says Aida Kleffmann, investor relations officer at Credicorp, BCP’s holding company. She adds that there had been rumors about a transaction swirling for several weeks, but denied a sale was being planned, or that there had been meetings with Santander, either in the past or scheduled for next week. “There’s a lot circling around out there, but nothing going on,” says Carlos Munoz, COO said earlier this week. He added that the bank has no interest in selling itself. However, Credicorp is controlled by the Romero family, and everything has its price. But BCP remains Peru’s dominant bank in terms of assets and will likely only trade at a very full price.

Last Friday’s lower than expected inflation reading leads analysts to predict no change at Peru’s Thursday monetary policy meeting. “The central bank will most likely keep the reference interest rate unchanged (at 5.25%) in its next monthly monetary policy meeting,” says Goldman. Peru has already increased rates by 75bp since July 2007 and raised bank reserve requirements last month, so it may want to take time to assess the effects of those tightening moves before moving again, it adds. The government also wants to avoid further sol appreciation.

Banco de Credito del Peru is not engaged in talks to sell itself to another bank, Carlos Munoz, COO tells LatinFinance. “There’s a lot circling around out there, but nothing going on,” says Munoz, adding the bank has no interest in selling itself. Rumors have circled for months that a large foreign entity has been courting BCP. Santander in particular has been identified as the number one suitor, say executives away from the bank. But BCP is held by Credicorp, which is controlled by the Romero family. Without their approval, the bank cannot be sold, say bankers familiar with the institution.

Peru’s central bank said Wednesday evening it was taking a series of measures to help reduce what it calls speculative flows into the country and in turn stem the strong recent appreciation of the currency. The measures take effect starting in February. The minimum reserve requirement for existing and new deposits was raised to 7% from 6%. Banks’ minimum required central bank deposit percentage was raised to 2% from 1%. The marginal reserve requirement for Sol-denominated deposits was established at 15%, while the marginal reserve for dollar-denominated deposits was raised to 40% from 30%. Central bank president Julio Velarde reportedly denied Peru would implement outright capital controls. “The higher reserve requirement should increase the banking system’s demand for dollars and make it easier for the central bank to absorb new dollar inflows,” observes Credit Suisse. In the past week, foreign investors have been taking long PEN positions in the NDF market, betting on a continued appreciation of the Peruvian currency, a Wall Street salesperson tells LatinFinance.

Little fundamental impact is anticipated from Peru’s FTA passing through the US Senate this week by a healthy margin, as expected. The pact, which should be in full-effect by mid-2008, is fundamentally supportive as it will attract foreign investment, say analysts. However the markets impact is forecast to be slight. “We do not expect a significant impact of the approval on the bonds, given the expected result granted by the strong backing already received at the House vote in November,” says Merrill Lynch. “In the short term, its impact on the real economy will be limited, given that 98% of the exports to the US already enter duty-free under the ATPDEA program,” it adds.

An RFP has gone out for a syndication of up to $1.05bn in debt to support a $2.25bn financing for the Peru LNG liquefaction terminal, according to officials at financial advisor Societe Generale. Banks have until December 17 to pitch for roles in arranging a $250m B loan from the IDB and ECA guarantee facilities from the US Export-Import Bank ($400m), Export-Import Bank of Korea ($150m) and Italy’s Sace export credit agency ($250m). The remainder of the financing comes from a $300m IFC A loan, a $400m IDB A loan, a $150m direct loan from the Export-Import Bank of Korea, and $350m in local bonds underwritten by Peruvian banks. The financing is expected to close by the end of February and each tranche will have a tenor of 18-20 years. Construction on the $3.8bn, 625m cubic feet per day terminal in Pampa Melchorita, south of Lima, began in January and is expected to wrap up by mid-2010. About $1bn has been spent so far, coming through equity from sponsors Hunt Oil, SK Energy, Repsol YPF and Marubeni.