Fitch has upgraded Cabei to A- (stable) from BBB+. The agency notes an improvement in the credit quality of Cabei’s founding members, a strong capital base despite vigorous growth, a return of private sector exposure to historic levels and the enhancement of several self imposed corporate governance rules and control techniques. It also highlights Cabei’s preferred creditor status, strong capital base, good asset quality and established track record in terms of self sustainable profitability. Limitations include the volatility of the economic environments in which the institution operates, significant loan concentration and the member countries’ creditworthiness. “The ratings also factor in relatively high average exposure to the private sector,” says Fitch. “As Cabei is one of the few providers of medium-term financing to the region, Fitch considers that its shareholders have a vested interest in supporting it should it run into difficulties.” The Honduras-based bank is 59% owned by its five founding member states: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The remainder belongs to Argentina, Colombia, Mexico, Taiwan, Spain, Dominican Republic and Panama. The bank’s usable capital/required capital ratio remains relatively strong at 2.7x at end-June 2007, says Fitch.
Category: Structured Finance
Ecuador Gets $62.2m IDB Loan
Ecuador has secured a $62.2m 20-year loan from the IDB for the renewal of the TAME Línea Aérea de Ecuador aircraft fleet. The deal carries a national government guarantee, has a one-year grace period, and pays a variable interest rate. “The program will facilitate integration and connectivity in Ecuador, especially among the country’s most isolated and disadvantaged areas, through improvements in the operations and commercial air transportation services provided by TAME,” says IDB team leader Esteban Diez-Roux. “The aircraft fleet will be renewed and the company’s business capacity will be strengthened,” he adds. The deal supports the purchase of two Embraer ERJ-190AR aircraft to modernize TAME’s fleet and improve the provision of air services.
Mexican ABS Pipeline Grows
Mexican mortgage lender Metrofinanciera is preparing a peso-denominated $100m-equivalent Reg S/144a 5-year RMBS. Pricing is expected December 11. An A series of up to MXP858m and subordinated B series of up to MXP141m will pay interest over TIIE. The issue is rated mxAAA by S&P. Deutsche Bank and Ixe are leading the global and local portions, respectively. Separately, BBVA Bancomer has registered to sell up to MXP20bn in MBS from a 5-year program. The sale will be managed by its own brokerage unit. Meanwhile, Banorte recently priced MXP5.34bn in 2037 bonds backed by loans to local governments and municipalities as well as state and federal Mexican bonds. The transaction via JPMorgan was given an Aaa local rating from Moody’s and priced at 48bp over 28-day TIIE.
Colombia’s Telefonica Brings Challenging Loan
Amid the stormiest conditions of the year for LatAm borrowers, the Colombian arm of Spain’s Telefonica has launched an A/B loan worth $600m. The IDB and four other bookrunners – Citi, BNP, ABN AMRO and Santander – are syndicating out a $475m 5-year amortizing loan paying 125bp over Libor out of the box, based on a leverage grid, say bankers familiar with the terms. Pricing moves on a leverage grid between 4.0x, where it pays 150bp over Libor, and under 2.5x, where it pays 75bp over Libor. Current leverage is 3.0x-3.5x and the deal has 3 years’ grace. MLAs are being offered $50m tickets for an up-front fee of 50bp. Lead arrangers can take $35m for a 30bp fee, while arrangers can have a $20m ticket for 15bp. Bookrunners are apparently seeking five MLAs. The IDB is also doing a $125m 7-year A loan, which pays 145bp over Libor out of the box. Poor timing will test the deal, which has been waiting in the wings for months. In the past week, credit market conditions have deteriorated further, sapping bank market liquidity at a time when lenders typically close up shop. Given this backdrop, the transaction, whose bank meeting was heard to be underattended, may struggle to gain momentum. Telefonica will likely have to wait until January to wrap up syndication.
Fitch Sees Mexican CRE Growth
Demand for commercial real estate (CRE) in Mexico is trending higher and should boost financing that employs commercial mortgage-backed securitization (CMBS) technology, both local and cross-border, according to Fitch. “Falling interest rates over the past few years, along with liquidity provided by foreign and institutional investors, have made the financing of new developments possible,” says Greg Kabance, MD of Fitch’s LatAm structured finance group. The near-term outlook for the CRE industrial market in Mexico is positive, helped by demand from North American manufacturers. “The industrial market is nearing its mature stage; new construction is almost always rapidly absorbed while general vacancy, and lease rates have remained stable over the past five years,” says Fitch. However, the agency believes there are still some hurdles to clear before true CMBS technologies are to be employed in the Mexican CRE market, such as the short-term nature of leases, possible liquidity shortages, tighter underwriting standards and fluctuating risk appetites, as well as the inclusion of non cash flowing properties in CRE portfolios.
IDB Signs Brazil Port Financing
The IDB has approved $144m in financing for Itapoa Terminais Portuarios for a private greenfield container terminal in Brazil’s Santa Catarina state. The package comprises an IDB loan of up to $57.6m from the bank’s ordinary capital and approximately $86.4m of co-financing from commercial banks. The project, dubbed TECON Santa Catarina, consists of the design, construction and operation of the port, including a quay and access bridge, container yard and administration buildings, general installations such as utilities, and other necessary equipment. It will add an additional 300,000 containers per year in port capacity, says the IDB.
IDB Lends $50m to Peru’s Sedapal
The IDB has approved a $50m loan to support the first phase of the Sedapal Lima water utility’s “Water for All” program. The program extends water and sanitation coverage in the outlying areas of the city. Sedapal expects to invest $1.4bn through 2011, to be raised through company generated cash flow, external loans, and state funding.
Bancomer, HSBC Plot ABS Issues
Mexican banks BBVA Bancomer and HSBC are heard to have sizable RMBS transactions in the works, according to an investor familiar with the plans of the issuers. HSBC is heard to be mulling an local offering worth the equivalent of $200m-$300m in RMBS, while Bancomer, long expected to tap the local market, may come with an issue even sooner, before the year-end. While size and collateral for the Bancomer offer are still unclear, the deal is heard to be in line with other similar offerings, which means it could reach $300m in size too.
S&P Sees no Mexico RMBS Flood Damage
S&P says that the devastating floods in the Mexican state of Tabasco will have little impact on RMBS, based on a preliminary evaluation of the mortgage pools that included properties in the stricken area. “During our recent assessment, we found that these pools had only a small percentage of affected loans and mortgages,” says the agency. It adds that 46 transactions were issued between 2003 and 2007 that are still outstanding. “Of these securitized pools, none had more than 0.7% of its loans in Tabasco. Consequently, the overall impact on Mexican RMBS should be relatively small,” says S&P. It expects mortgage loan servicers to assist with issues such as property inspections, forbearance plans, filing and settling insurance claims, and handling any federal aid for properties in the affected transactions.
Banks Join IDB Trade Finance Program
The IDB has appointed several financial institutions confirming banks in its trade finance facilitation program (TFFP). They are BBVA subsidiaries in Argentina, Chile, Colombia, Mexico, Panama, Peru, Paraguay, Uruguay and Venezuela. In addition, Banco de Costa Rica and Panama’s Banco Aliado were appointed issuing and confirming banks in the same program. The BBVA LatAm subsidiaries add to its branches in Belgium, China, France, Italy, Japan, UK and USA as confirming banks. “The participation of its Latin American subsidiaries makes BBVA one of the leading TFFP confirming banks in the region and will further boost the TFFPs’ objective of fostering intra-regional trade finance flows,” says the IDB. It adds that the inclusion in the program has enabled BBVA Uruguay to directly confirm a standby LC issued by an Ecuadorian TFFP issuing bank and used for the import of machinery from Uruguay to Ecuador, hence promoting trade business between the two countries. Under the TFFP, the IDB extends guarantees to cover documentary and standby LCs, promissory notes, bills of exchange, bid and performance bonds, advance payment bonds and other instruments used in international trade finance transactions.