Category: Structured Finance

Donald Terry, the head of the IDB’s Multilateral Investment Fund (MIF), is retiring July 1. He is 62 June 20, and therefore eligible for retirement. Terry is well known for his work on remittances and this week warned that the Mexican economy could be severely impacted if flows from abroad, currently flat, start to drop. A fall in remittances to Brazil is actually a good sign, according to Terry, as more Brazilians stay home or return from abroad because of better economic conditions and the appreciation of the BRL. Terry tells LatinFinance he is talking to the World Bank and other organizations about continuing his career, in Africa.

The party may soon be over for LatAm as the eventual onset of the commodity bust coincides with the start of the election cycle, says BCP Securities in a note from the IDB meetings. The shop notes “a strange disconnect” at the Miami meetings, characterized by rampant optimism of Latin Americans versus a somber mood from North Americans and Europeans. “Many institutional clients were forced to skip the meetings, due to budget cuts and reduced travel allowances. The venues lacked the flair of previous years, when no cost was spared on entertainment and glitz. Moreover, many discussions focused on the depth of the global financial crisis, and the implications it had for the southern latitudes,” says BCP. “As much as the Latins tried to revive the party atmosphere, there was a sense that it was all over.”

The IDB has approved a $20m senior A/B loan for Honduras’ Banco Ficohsa to support the expansion of housing loans and credit for SMEs. It is part of a $25m medium to long-term credit facility, with a $5m MIF subordinated loan expected to be approved shortly. “The new loans will help Ficohsa to expand its mortgage portfolio and issue more loans to small and medium-sized businesses,” says the IDB. “It will also help to diversity Ficohsa’s funding sources and extend the terms of its debt obligations.” Ficohsa is the third largest bank in Honduras in terms of assets. In December 2007 it had $1.1bn in assets and $780m in deposits, says the IDB.

A $150m conditional credit line from the IDB signed last week will help develop much needed mortgage and long-term financing in Paraguay, its finance minister Cesar Barreto Otazu tells LatinFinance. “The country needs to finance productive investments,” Barreto Otazu says. “Paraguay’s financial system cannot provide those resources because of the short term of the deposits in it,” he says. The loan will help strengthen long term financing initiatives led by Paraguay’s Development Finance Agency, a second tier financial unit created by the Paraguayan government. The IDB loan also will aid the country’s effort to boost meat exports, education reform and an economic census. Paraguay is planning to return to the international debt markets in 2009, the minister says. But it is currently implementing measures to improve the country’s rating and overall fiscal scenario. Upcoming elections also could help boost financial stability. “Once the political panorama is clearer in Paraguay we will be able to access the markets in better conditions,” Barreto Otazu says.

The Mexican economy could be severely impacted should remittances from abroad, currently flat, start to decrease, according to Donald Terry, manager of the multilateral investment fund of the IDB. “After oil, remittances are the No. 2 source of capital going into the country,” Terry tells LatinFinance. Currently 5-6 million families, already on the lower end of the social scale, depend on the money sent from abroad. “You’ll see poverty levels increase in Mexico,” Terry says. A drop in remittances to Brazil is actually a good sign, according to Terry, as more Brazilians stay home or return from abroad because of better economic conditions at home and the appreciation of the BRL. Overall, the panorama for remittances to LatAm remains stable, Terry states. “I don’t think remittances are going down. They are flat. But they are not increasing either,” he says.

The IDB has closed on the first part of a $65m A/B loan for El Salvador’s Banco Multisectoral de Inversiones (BMI). The multilateral’s first loan for a financial services firm in the country allows the mid-sized lender to make long-term mortgage and small-business loans. The facility is composed of a $50m 10-year A tranche from the IDB and a B tranche that will undergo a small syndication. The syndicated piece is expected to be 5-7 years and reach about $15m in size. BMI is owned by the Salvadorian central bank. IDB officials tell LatinFinance that a similar transaction that adds a subordinated piece to the A tranche is also being prepared for another CentAm financial services institution. The IDB is also readying a loan for Costa Rican state utility ICE featuring an $180m A tranche and $200m B tranche with Citi as lead arranger.

The Mexican economy could be severely impacted should remittances from abroad, currently flat, start to decrease, according to Donald Terry, manager of the multilateral investment fund of the IDB. “After oil, remittances are the No. 2 source of capital going into the country,” Terry tells LatinFinance. Currently 5-6 million families, already on the lower end of the social scale, depend on the money sent from abroad. “You’ll see poverty levels increase in Mexico,” Terry says. A drop in remittances to Brazil is actually a good sign, according to Terry, as more Brazilians stay home or return from abroad because of better economic conditions at home and the appreciation of the BRL. Overall, the panorama for remittances to LatAm remains stable, Terry states. “I don’t think remittances are going down. They are flat. But they are not increasing either,” he says.

The IDB has closed on the first part of a $65m A/B loan for El Salvador’s Banco Multisectoral de Inversiones (BMI). The multilateral’s first loan for a financial services firm in the country allows the mid-sized lender to make long-term mortgage and small-business loans. The facility is composed of a $50m 10-year A tranche from the IDB and a B tranche that will undergo a small syndication. The syndicated piece is expected to be 5-7 years and reach about $15m in size. BMI is owned by the Salvadorian central bank. IDB officials tell LatinFinance that a similar transaction that adds a subordinated piece to the A tranche is also being prepared for another CentAm financial services institution. The IDB is also readying a loan for Costa Rican state utility ICE featuring an $180m A tranche and $200m B tranche with Citi as lead arranger.

A $150m conditional credit line from the IDB signed last week will help develop much needed mortgage and long-term financing in Paraguay, its finance minister Cesar Barreto Otazu tells LatinFinance. “The country needs to finance productive investments,” Barreto Otazu says. “Paraguay’s financial system cannot provide those resources because of the short term of the deposits in it,” he says. The loan will help strengthen long term financing initiatives led by Paraguay’s Development Finance Agency, a second tier financial unit created by the Paraguayan government. The IDB loan also will aid the country’s effort to boost meat exports, education reform and an economic census. Paraguay is planning to return to the international debt markets in 2009, the minister says. But it is currently implementing measures to improve the country’s rating and overall fiscal scenario. Upcoming elections also could help boost financial stability. “Once the political panorama is clearer in Paraguay we will be able to access the markets in better conditions,” Barreto Otazu says.