Category: Funds

Money poured into EM equity and bond funds during the final week of October as investors positioned themselves to benefit from Fed rate cuts, according to EPFR Global. Diversified global EM equity funds had their best week in dollar terms since EPFR started tracking them, and dedicated EM equity and bond funds absorbed a net $5.74bn. “While investors continued rotating money out of funds geared to developed markets, this week’s flows into emerging markets were largely funded by cash moving off the sidelines,” says EPFR. EM equity funds have taken in $33.6bn since the last week of August. “That’s half as much again of their total for all of 2006, and it represents a major bet that the US economy will not slip into recession or, if it does, these markets are sufficiently decoupled to cope,” says EPFR Global Analyst Cameron Brandt.

LatAm equity funds suffered last week as investors pulled money out of Mexico focused funds because of that market’s tight correlation with the US, says EPFR Global. The fund tracker adds that BRIC equity funds absorbed new money for a 9th straight week and Brazil, Russia and India dedicated funds also recorded net inflows. Global bond funds lost $933m last week, and both high yield and EM bond funds recorded outflows as investors again reassessed riskier assets in portfolios, says EPFR Global.

Moody’s has assigned a Baa3 (stable) issuer rating to Votorantim Celulose e Papel (VCP) to reflect its position as one of the lowest cost pulp producers globally. The agency praises VCP’s long-term sustainable business model, depicted by structural cost advantages against most international peers, including substantial self-sufficiency in wood fiber and electricity, as well as efficient logistics. “The ratings also benefit from the liquidity provided by the company’s large timberland holdings and from the support of the Votorantim group,” adds Moody’s. Negatives include VCP’s small size relative to international players, low operational diversity with concentration of pulp production on one single site, and risks associated with capacity expansion projects and negative free cash generation expected during its growth phase, expected to extend until 2012.

Moody’s has assigned a Baa3 (stable) issuer rating to Votorantim Celulose e Papel (VCP) to reflect its position as one of the lowest cost pulp producers globally. The agency praises VCP’s long-term sustainable business model, depicted by structural cost advantages against most international peers, including substantial self-sufficiency in wood fiber and electricity, as well as efficient logistics. “The ratings also benefit from the liquidity provided by the company’s large timberland holdings and from the support of the Votorantim group,” adds Moody’s. Negatives include VCP’s small size relative to international players, low operational diversity with concentration of pulp production on one single site, and risks associated with capacity expansion projects and negative free cash generation expected during its growth phase, expected to extend until 2012.

Ecuadorian President Rafael Correa says his country plans to rejoin OPEC at its November summit in Saudi Arabia, according to wire reports. He adds that the move will give Ecuador “privileged information” about the world oil market. No official announcement has been made. OPEC has agreed to stretch Ecuador’s repayment of an outstanding debt of €3.5m over three years. Ecuador joined OPEC in 1973 then suspended its membership in December 1992.

Ecuadorian President Rafael Correa says his country plans to rejoin OPEC at its November summit in Saudi Arabia, according to wire reports. He adds that the move will give Ecuador “privileged information” about the world oil market. No official announcement has been made. OPEC has agreed to stretch Ecuador’s repayment of an outstanding debt of €3.5m over three years. Ecuador joined OPEC in 1973 then suspended its membership in December 1992.

Mexican construction company Empresas ICA has signed four contracts with Proyecto Esmeralda Reso (PER) for MXP1.03bn for work on a tourism project in the southeastern state of Campeche. The contracts run from nine to 11.5 months and include residential buildings, recreation areas, a marina, docks and related work. PER is a subsidiary of Spain’s Grupo Mall.

Mexican construction company Empresas ICA has signed four contracts with Proyecto Esmeralda Reso (PER) for MXP1.03bn for work on a tourism project in the southeastern state of Campeche. The contracts run from nine to 11.5 months and include residential buildings, recreation areas, a marina, docks and related work. PER is a subsidiary of Spain’s Grupo Mall.

LatAm pension fund Previ and Brazil’s state development bank BNDES plan to sell shares they hold in Banco do Brasil in a secondary offering. No value or timing was given. The two said in July that they were considering selling as much as 5% of Banco do Brasil shares in an offer before the end of the year. BB Banco de Investimento, UBS Pactual and Deutsche Bank will lead. In another statement, the Banco do Brasil said that it would seek to hire investment banks to advise it on issuing ADRs.

EM local currency bond funds were responsible for all of the $267m inflow to the broad EM bond fund group last week, according to EPFR Global. EM hard currency bond funds had net outflows. “Investors appear to prefer the local currency funds as dollar weakness provides an incentive to increase exposure to non-USD currencies,” says EPFR. The inflow to EM bond funds was the largest since the second week of June, while in performance terms it was the second best week of the year. By contrast, global bond funds saw $286m pulled out by investors, even though their year-to-date portfolio performance is better than that of EM, says EPFR.