Roundup: DB cuts Bancolombia to hold, Davivienda bonds, Banco Finansur debt

Thursday, August 25, 2011

Deutsche Bank (NYSE: DB) has downgraded Bancolombia (NYSE: CIB) to hold, given its stock's outperformance this year and the fact that it is at risk from lower interest rates and higher provisions.

"Our main concern for Bancolombia is that if interest rates decline, its net interest margin (NIM) would feel pressure, given that about 80% of its loans are variable rate. However, our economists think that a rate cut is unlikely to happen in the next six months," Deutsche Bank said in a report.

Bancolombia's provision charges could also rise from a historically low level of 0.8% of loans this year, but the bank has a high coverage ratio of 187% of non-performing loans (NPLs), the report reads.

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Colombia's third largest bank, Davivienda, has issued 500bn pesos (US$280mn) worth of bonds in four tranches. Investor demand hit 1.45tn pesos, the bank said in a press release.

According to local brokerage Interbolsa, Davivienda's debt issue is another example of a new trend in the local market, as due to the country's macroeconomic and legal stability, Colombian companies are looking for opportunities to get new financial resources.

Davivienda plans to tap the local debt market again next month with a 300bn-peso bond sale, and its board recently authorized the issuance of US$350mn worth of bonds on international markets.


Moody's has assigned a B1 global local currency rating and a Aa3 national scale local currency debt rating to Argentine lender Banco Finansur's proposed bond issuance for up to 25mn pesos (US$5.97mn).

The notes, the ninth issuance under the bank's existing 70mn-peso short-term debt program, will mature in 270 days. The outlook on all ratings is stable, the agency said in a report.

Buenos Aires-based Banco Finansur had assets of 846mn pesos and deposits of 544mn pesos as of end-June.