Fitch has upgraded the ratings of Brazil’s Banco Fibra to A from A minus. The outlook is stable. The upgrade reflects an enlarged middle market and retail client base, satisfactory profitability and asset quality and prudent liquidity and debt management. Fibra is 92.1% controlled by the Steinbruch family, which has interests in the textile, steel and real estate sectors, and 7.9% by the IFC. Fibra started its activities as the financial arm of Grupo Vicunha and was transformed in 1993 into an independent business unit.
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Colombia Rate Stays Intact
Colombia’s central bank has left its monetary policy rate intact at 3.00%, citing lower-than-expected inflation in July at 2.24% and faster-than-expected growth in the local economy. Standard Chartered forecasts that the first rate hike of 50bp will come in December and the policy rate will rise to 5.0% by June 2011. Barclays Capital continues to think the bank will remain on hold through year-end, beginning to normalize monetary policy in January 2011.
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Mexico Leaves Rate Unchanged
As expected by the market, Mexico’s central bank kept the monetary policy rate at 4.5%. The bank says that although manufacturing activity and exports are growing at an accelerated pace, this could be affected by a worsening economic outlook in the US. Bulltick thinks the bank will start tightening in H2 2011, with the rate ending 2011 at 5.25%. Barclays expects tightening to start in June 2011.
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Iron Ore Player to Raise Funds
Steel do Brasil is planning to raise BRL1.3bn through a rights offering to existing shareholders. The iron ore investor will offer 435m shares at BRL3 each, during a period lasting from August 24 to September 22. Steel is in need of cash to finance operations at its mining projects. The company, led by former CSN executive Juarez Saliba, has been on an acquisition spree this year, buying control of Mhag for $245m and all of Minas Bahia for BRL250m.
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Mexico’s Pochteca Issues Local Bond
Pochteca Materias Primas y Pochteca Papel, a Mexican paper, solvent and polymer producer on Friday issued MXP350m in 4-year bonds at a spread of TIIE plus 180bp. The bonds are rated AAA on a national scale. It is the company’s first public debt issuance, according to a banker at bookrunner IXE. Fund managers, private banks and insurance companies were the main investors. Proceeds of the transaction will be used to refinance more expensive debt and for working capital. The company is looking to grow its business and to make acquisitions in the future, says a banker at the lead.
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Hupecol Sells Colombian Assets
US-based oil and gas company Hupecol has sold a unit that owns the Dorotea and Cabiona blocks – Colombian oil assets – to an undisclosed buyer for $200m. It also sold the unit that holds the Colombian Leona and Las Garzas oil finds for $81m. Scotia Waterous was the seller’s financial advisor.
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Funds Flow to LatAm
LatAm equities have seen inflows of $3.9bn so far this year, of which Brazil funds alone have received $2.6bn, according to data from Barclays, citing EPFR Global. In the week ended August 18, LatAm equity saw inflows of about $525m. In addition, performance of LatAm equity funds was positive, according to Lipper, which says they gained 2.27% on the week ended August 19. They are still down 0.34% year-to-date. Meanwhile, EM funds rose 1.70% in the week and are up 2.38% ytd and global small and mid cap funds firmed 0.60% in the week and 0.93% ytd.
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Gerdau to Call Perp
Gerdau plans to call its 8.875% perpetual bond. It will buy back the entirety of the $600m Ba1/BBB minus note September 22, using cash on hand. This year the call dates for several Brazilian perpetual issues have started to arrive, with companies needing to decide whether to repurchase them or replace them with a new perpetual bond, in most cases at a much lower coupon. In April, Globo arranged to swap a $325m 9.375% perp for a new one paying only 6.250%. Odebrecht is expected to do the same next month, after market conditions delayed a $200m deal to replace a 9.625% perpetual in April.
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Codelco Considers Bond Issue
Codelco is heard considering a return to the bond markets, according to DCM bankers, having sent out an RFP. The state owned miner last raised funds internationally in January of 2009, with a $600m deal. Codelco faces around $15bn in investment needs over the next few years to maintain and increase copper production levels, Moody’s says in a recent report lowering the outlook its A1 rating to stable from positive. Codelco’s next maturity is $435m in November 2012, according to Credit Suisse. It has the option of domestic funds also, under a shelf filed last year. The Chile sovereign paved the way last month for Codelco, raising $1.52bn at lower levels than expected in its first cross-border bond issue since 2004. The Aa3/A/A+ sovereign drew more than $10bn in orders, according to bankers on it, and gave little concession on price. Citi, HSBC and JPMorgan managed the sale, and would be among competitors for the copper producer’s mandate.
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BNDES Looks to Euros
BNDES is considering a euro-denominated bond, according to DCM bankers familiar with the issuer, as more of the region’s borrowers gravitate towards that market. The development bank owned by the Brazilian government raised $1bn in January through a 5.5% of 2020 via Barclays and HSBC. This year, 3 corporate Latin issuers, including 2 Brazilians have tapped the euro market, which can offer attractive rates and diversification, though investors say liquidity is still focused on the dollar market. Miner Vale sold EUR750m in 4.375% of 2018s to yield 4.441% in March, and conglomerate Votorantim placed EUR750m in 5.25% of 2017s to yield 5.319% in April. In June, Mexico’s America Movil placed EUR1.75bn in 3.75% of 2012 and 4.75% of 2022 bonds, yielding 3.87% and 4.873%, respectively. The price sensitive issuer claimed to have paid only a 5bp new issue premium, though bankers say fluctuations in rates versus dollars need to be monitored closely. Meanwhile, frequent sovereign issuer Mexico last month placed its first euro-denominated bond since 2005 with a view to establishing a more recurrent presence. And Brazilian corporate Braskem is also considering issuing debt to European investors for the first time.