Emilio Mahuad, head of Mexico principal investments at Bank of America-Merrill Lynch (BAML), is being named head of investment banking for the country, according to people close to the matter. He is replacing Laurent Massart, who will remain at the firm, assuming a role in the M&A department. Neither executive was available for comment. The move is understood to be close to being announced internally. Separately, BAML has hired Alberto Ades as co-head of fixed income strategy and economics. Ades, who in June will join co-head Daniel Tenengauzer, comes from Citi, where he was head of LatAm economics and market analysis for the past 5 years. Prior to Citi, he spent 11 years at Goldman Sachs. Ades and Tenengauzer will report to Michael Maras, head of global credit research and Adam Quinton, head of global macro research. BAML also recently added LatAm credit analyst Anne Milne from Deutsche Bank, who will be global head of EM corporate research after a 3-month gardening leave.
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LatAm Equity Fund Flows Hit Highs
Flows into LatAm equity funds hit an 8-week high in the week ended March 17, while flows to Mexico equity reached a 101-week high, says EPFR Global. However, according to Lipper data, LatAm equity funds lost 0.90% in the week ended March 18, bringing year-to-date performance to a negative 0.72%. Meanwhile, EM equity funds gained 0.98% in the week and have risen 2.18% YTD. Global small and mid-cap funds dropped 0.94% in the week and have lost 4.26% YTD.
CFE Sets Local Jumbo Placement
Mexico’s CFE has indicated March 24 as the price date for its domestic bond issue of up to MXP5bn, according to regulatory documents. The 10-year fixed and floating-rate issue is rated AAA on a national scale and managed by Banamex and Santander. The state-owned utility is also readying a MXP500m 3.5-year floating rate transaction through Ixe, expected in early April. A successful pricing is expected to help reanimate a local debt capital market long starved of supply.
IFIs Fund Microfinance Support
A group of multilaterals and private backers has launched a new facility to help microfinance institutions deal with tighter liquidity conditions post-crisis. “The new facility is expected to provide up to $250m in medium and long-term loans to microfinance institutions throughout the region,” says the IDB. OPIC has contributed a $125m loan to the Microfinance Growth Fund (MIGROF), and is joined by the IDB’s Multilateral Investment Fund with $10m, CAF ($5m) and the IIC ($5m). Banamex, the Norwegian Microfinance Initiative, ACCION International and Swiss-based microfinance investment manager BlueOrchard are also providing undisclosed amounts. The fund will offer medium and long-term financing in local currency and US dollars, targeting 35% of the total in local currencies. It is expected to begin lending within a few weeks.
MBIA Unit Files CCD
LatAm Capital Advisors, a subsidiary of MBIA, has filed to raise funds for an infrastructure investment vehicle in Mexico’s CCD market. The Administradora de Fondos de Infraestructura en Mexico vehicle plans to make investments of up to 30 years in different infrastructure areas in Mexico, over a 10-year period. The expected size of the transaction – generally a moving target throughout the long period of analysis and negotiation typical of CCD deals – has not been indicated. State-backed bank Banobras may buy up to 20% of the transaction, according to regulatory documents. It did the same in Macquarie’s MXP3.4bn CCD based infrastructure fund sold in December, the only such trade to close thus far. Banamex is managing the transaction.
Mexico Tees Up 2040 Udi Sale
Mexico is preparing to syndicate a 30-year Udibono early this week. A MXP10bn-MXP15bn size is planned for the 4% coupon bond, with the high end of the volume range looking most likely, Mexico’s head of public credit Gerardo Rodriguez tells LatinFinance. “We’re seeing a healthy demand,” says the official. The existing 2035 Udibono is the benchmark, with a 25bp pickup likely for duration, he adds. Mexico hopes to raise foreign participation in local issues through the sale. Udis typically get less than 5% overseas investor interest, versus around 25% for bonos. “Inflation indexed securities are becoming more popular in the world and people are looking at ways of expressing that view,” says Rodriguez. Bookbuilding will start early this week, including the release of official guidance. The local syndication marks the second such transaction, following last month’s MXP25bn sale of 2020 bonds. The new system aims to establish large benchmark bonds instantly, instead of through several periodic smaller sales. The aim is also to broaden the investor base and make the new securities index-eligible. The same group of banks will be involved in this week’s deal, though with different roles. Banamex, HSBC, ING, and Bank of America-Merrill Lynch will manage the deal, with Santander, BBVA Bancomer and JPMorgan as co-managers. The government has also said it plans to issue a 5-year bond using the same process later in the year.
Riviera Maya Airport Bidding Set to Start
Mexico will announce this week a $300m greenfield airport project 100km south of Cancun called Riviera Maya, Banobras head Alonso Garcia Tames tells LatinFinance. Banobras is acting on behalf of the government as structuring agent, and could participate in the financing, depending on the developer, says Garcia. Banobras expects to see interest in the project from foreign as well as Mexican engineers and developers.
Eike Batista Persists With Holdco IPO
Despite last week’s poorly received shipping unit float, Brazilian tycoon Eike Batista will likely push ahead with a plan to IPO his holding company, EBX. The holdco owns majority stakes in 5 publicly traded companies with a combined market cap of BRL75bn, say bankers and investors familiar with the Batista empire. The weak performance of OSX’s IPO versus expectation – it raised BRL2.8bn, 62% less than what was originally targeted – led some to presume an EBX float was off the table. However, some investors think differently. “I don’t think there’s any contamination here,” says a Rio-based portfolio manager with BRL4.5bn under management. “[The OSX IPO] doesn’t mean the market is closed for EBX,” he adds. “EBX management will have to demonstrate what their differential is, and that the holdco is not merely a sum of the [publicly listed parts] but rather a company with a unique asset that can generate growth,” he adds. The investor notes a case can be made for investing in Brazil holdcos, pointing to Telemar, Bradespar, Metalurgica Gerdau and Itausa as examples. A banker close to Batista claims EBX will offer investors a way to participate in the future growth spurts of his projects. “Investors will participate in the value creation since the very beginning, when [Eike’s] projects often see the steepest growth curves,” he notes. EBX’s stakes in the publicly listed companies are worth $30bn, he estimates, with another $10bn or so in unpriced assets like real estate, forestry, entertainment and gold ventures. The public value of EBX could settle at around $30bn assuming a 25% or so discount to recognize the fact it is a holdco, and not an operating company. An investor says Credit Suisse is among banks tapped to lead, and that an early version of a prospectus for EBX’s IPO has already been produced.
Chile Leaves Rate At Low
As expected, Chile’s central bank left the monetary policy rate unchanged at 0.5%. The bank says that “given the current circumstances, marked by the uncertainty associated with the effects of the earthquake, maintaining the policy rate at its minimum 0.5% level until at least the 2Q2010 is coherent with projected inflation at 3.0% over the relevant horizon for monetary policy.” Goldman Sachs says that rather than initiating the rate normalization cycle sometime during Q2, it now expects the central bank to delay the first move to no earlier than Q3, with the policy rate likely reaching year-end 2010 at no more than 2%. Bulltick, which also expected no changes to the policy rate, believes there will be no hikes “until earliest the last quarter of this year if at all.”
IMF Approves El Salvador Funds
The IMF says it has approved a 36-month, SDR513.9m (about $790m) stand-by arrangement (SBA) for El Salvador to help the country mitigate the adverse effects of the global crisis. The new arrangement, which the authorities intend to treat as precautionary, will succeed the 15-month SBA approved in January 2009. The objectives of the program are to speed up the economic recovery, reduce poverty, preserve financial stability, increase the reach and efficiency of social programs and secure debt sustainability. One of the immediate priorities is to support domestic demand through a countercyclical fiscal policy in 2010, which includes modernizing the country’s road network and bolstering electricity generation. El Salvador’s IMF quota is SDR171.3m (about $261.3m).