The IFC is planning to buy a $30m remittance securitization from El Salvadorian cooperative Fedecredito, using the diversified payment rights (DPR) structure to benefit a microlender. “Fedecredito is the first time a financial intermediary just focused on the bottom of the pyramid has taken advantage of a fundraising product used by larger institutions,” Xavier Jordan, principal investment officer at IFC, tells LatinFinance. Fedecredito is a co-op owned by 55 credit unions and workers’ banks in El Salvador that raises funds and provides services to members. It has previously funded itself through banks, and the Banco Multilateral de Inversiones and other multilaterals, Jordan says. The IFC will purchase the 7-year deal, which pays a spread to Libor that Jordan declines to disclose. Remittance securitizations using DPR have been used before in the region, but by large retail banks, not microfinance institutions. Fedecredito processes about $200m in remittances per year, or 5% of El Salvador’s market, says Jordan. According to JPMorgan, El Salvador’s remittances rose 6.1% to $327m in May, taking the tally for the first 5 months of the year to $1.48bn, 2.6% higher than in the same period of 2009. It notes that the central bank is forecasting remittances to increase 4.6% year-on-year to $3.6bn this year. Jordan says the IFC is considering replicating the structure, as there are other intermediaries in Central America similar to Fedecredito. A structure under which the IFC invests along with a tranche of other investors is also possible.
Category: Structured Finance
Brazilian Bank Preps Loan ABS
Brazilian lender Banco BVA is preparing to raise BRL200m through a loan securitization using the FIDC structure, according to regulatory documents. It is the bank’s second of the year, and involves loans made to small and medium-sized businesses, according to an official at the bank. The deal features a 4-year AA+ rated senior tranche that pays interest at the DI rate plus 3.5%, and BRL70m in subordinated debt. Bookbuilding is expected to wrap up at the end of the month or early July. BVA is self-leading the deal, which follows a similar BRL300m placement in April.
Infonavit Places RMBS
Mexico’s Infonavit has raised MXP4.2bn from its second domestic RMBS sale of the year. The government-owned mortgage lender priced a MXP2.1bn 2038 tranche denominated in the UDI inflation-linked unit at 3.9%, or Udibonos plus 254bp. A tranche of the same size that amortizes after the first came in at 5.05%, or Udibonos plus 240bp. Total demand for the deal rated AAA on a national scale was about 1.6x, a banker on the deal says. Banamex and HSBC managed the sale. Infonavit raised MXP4.93bn in March with a similar sale through the same banks, paying interest rates of 4.11% and 5.33%, both for a 2038 maturity. Infonavit and fellow government lender Fovissste are the only Mexican domestic RMBS issuers since last year. Private securitizers fell by the wayside during the credit crisis.
Haiti Gets IDB Grants
The IDB says it will offer $200m in grants over 5 years to Haiti to boost agricultural production. “Agriculture is key to reviving Haiti’s economy after the earthquake,” says Hector Malarin, chief of the IDB’s rural development and environment division. “We want to help Haiti improve its food security conditions with projects that boost productivity and contribute to attract investment to rural areas.”
Membership Boosts CAF Outlook
S&P has improved the outlook for multilateral bank CAF’s A+ rating to positive from stable. “The positive outlook reflects CAF’s success in expanding its membership base, increasing its paid-in capital, and reducing the country concentration in its loan portfolio,” says S&P analyst Lisa Schineller. “CAF’s paid-in capital totaled $3.0bn at year-end 2009, up by $568m during 2009 alone and up $1.1bn since 2005, when paid-in capital totaled $1.9bn,” she adds.
Brazil Municipality Gets IDB Loan
The IDB has approved an $86m loan for the municipality of Sao Jose dos Campos in Sao Paulo state to help finance an urban development program that includes environmental, infrastructure and transportation projects. The loan has an amortization period of 20 years and 5.5-year grace period, with a Libor-based interest rate. The program has a total cost of $178m, with the remaining $92m coming from the municipality.
SP Road Authority Plans ABS
Sao Paulo’s Departamento de Estradas e Rodagem is planning to raise BRL708m through an FIDC local market securitization, according to regulatory documents. The deal is backed by future payments coming from privatizations of 5 road concessions in the state of Sao Paulo. In recent concessions, the government typically has received full payment at the time of an award. However, a banker on the deal explains, these 5 concessions – done during 1997-1998 – are paid for in installments over the life of their contracts, providing a steady flow of revenue to be securitized. The 8-year transaction is divided into 2 pieces with the first paying the DI rate plus 3.2%, and a second ICPA rate plus a spread to be determined during bookbuilding. The amount of each series remains to be set, with the issuer able to size closer to the time of the sale according to demand, says a banker on it. Santander is managing the sale, not yet rated, which should begin a roadshow June 15, according to the filings, with bookbuilding estimated for July 14-23. The 5 concessions in the FIDC include the Autoban and ViaOeste concessions managed by CCR, and the Intervias, Centrovias and Autovias concessions managed by OHL.
Edomex Unleashes Long-Awaited ABS
State of Mexico (Edomex) is targeting the first week of June for a novel MXP4.3bn 20-year deal securitizing future flows of income from residential property title fees, according to a banker running it. Market participants hope the long-awaited trade can reinvigorate a peso structured debt market that has been moribund beyond a handful of government agency RMBS. If successful, Edomex would mark the first sizeable non-residential mortgage ABS in Mexico since the federal government raised MXP32bn on behalf of its states in a transaction backed by the FEIEF oil stabilization fund in September. Edomex has been working on the transaction since the middle of last year. People close to it pin the long turnaround on a Mexican DCM stalemate of late 2009 and early 2010, caused by jittery investors and cautious issuers haggling over post crisis pricing and covenants. The 2030 Edomex deal has a 14-year average life, pays fixed rate and is divided into 2 tranches. A MXP3.0bn tranche will feature a 100% guarantee from OPIC, while a MXP1.3bn slice carries a 30% first loss guarantee from CAF. Both portions are expected to be rated AAA on a national scale. Banamex and HSBC are managing the sale. Bankers and state officials claim it is the first of its kind and could be replicated by other Mexican states. The deal is structured by MBIA.
IDB Raises $1bn Bond
The IDB has sold $1bn in new 3-year bonds, with the AAA rated multilateral lender appearing to tread easily in the markets, while the region’s other hopeful issuers wait for more calm. The 2013 bonds priced at 99.753 with a 1.625% coupon to yield 1.706%, or UST plus 32bp. Barclays, JPMorgan and RBC managed the transaction.
Venezuela Gets IDB Loan
The IDB has approved a $140m loan for Venezuela to be used to improve the management of solid waste. The IDB loan has a 25-year term including a grace period of 5 years, and a variable interest rate based on the Libor. Venezuela will provide $60m in local counterpart funds.