Easing financing terms and the increasing number of corporate debt issues to fund special dividends and share buybacks are two developing trends that could negatively affect bond markets, according to the May Bond Market Observations from Standish, the Boston-based fixed income specialist for BNY Mellon.
“Both trends are detrimental to bond holders,” said Thomas D. Higgins, chief economist for Standish. “We are avoiding areas of the bond markets where we believe we are not being compensated for the associated risks.”
Despite these trends, Standish notes in the May report that it does not see evidence of imminent overheating in U.S. fixed income markets, except for Treasuries. The report also notes the benefits of liquidity created by central banks, including the lowered systemic risk and the rallies in global capital markets.
However, the report points to the diminishing effectiveness in generating real economic activity from successive rounds of quantitative easing. “Such policies may have long-term consequences, which could increase financial instability in the future,” Higgins said.
Increased liquidity may raise credit risks by compromising bank underwriting standards or discouraging necessary balance sheet repair and deleveraging as has occurred in Europe, according to the report. It also could lead to a yield-seeking behavior by investors that can push asset prices beyond their fundamental values and create bubbles in the financial markets, the report said.
Regarding Treasuries, the Standish report notes that they are probably the most overvalued of all fixed income assets due to the quantitative easing policies of the Federal Reserve. However, this is viewed as a byproduct of the easing policies to support economic activity, according to the report.
Wikimedia CommonsFoto: Che. El fondo de vino BAF adquiere la colección de Biondi-Santi
The Bottled Asset Fund (BAF), the wine investment fund launched in 2010 and directed by Sergio Esposito, a leading authority on Italian wine, today announced the acquisition of a historic collection of vintages of Biondi-Santi Brunello di Montalcino valued at $5 million (€4 million). This 7,000-bottle acquisition spans 1945-1975 and includes hundreds of bottles of the cult 1955 and 1964 vintages, representing a unique addition to the BAF portfolio. It is the largest vertical collection sale in history of “blue chip” Italian wines from a single source and with perfect provenance, as well as the largest single purchase in the history of Italian wine.
The deal was struck on March 19, 2013, only a few weeks before the sad passing of Franco Biondi-Santi on April 7th, 2013. Mr. Biondi-Santi was the fourth generation patriarch of one of the world’s most important winemaking families. The Biondi-Santi estate is widely recognized as the creator of Italy’s most important wine, Brunello di Montalcino, and, more importantly, it almost single-handedly introduced wines for long-term ageing to Italian wine culture. The family was the first to adopt the “Bordeaux model,” whereby wines are re-tasted and re-corked every few years, often with media present to extend their brand exposure. This model fosters a much higher quality that leads to greater market exposure and price appreciation over the long-term. At the time of Biondi-Santi’s adoption of the model, the protocol was unique for Italian wines.
“Biondi-Santi’s collection is legendary,” said Mr. Esposito, Director of the BAF’s investment board and Founder and CEO of Italian Wine Merchants, the premier Italian wine consultant in the US. “I’m highly confident that we reached a fantastic deal for our investors and for Italy itself. The quality of these bottles directly from cellar is incredible and their value will undoubtedly increase throughout the years as they are an Italian natural treasure.” Mr. Esposito’s long-term goal is to elevate the status of Italian wine as an investment asset, creating consistency, transparency and objective value in the Italian wine market.
The market for Italian wine is growing globally, with export markets, especially Asia, driving up value. The BAF value is currently seeing stunning profits, upwards of 30% and is projected to return profits to its investors, net of fees, of over 30%. By the end of 2013, Vino Management Corporation, the administrative body behind BAF, plans to launch another fund with the goal to commit $25 million.
Wikimedia CommonsPhoto: Hans Stieglitz. Mexican Company InverCap Closes Investment Funds to Focus on Pensions
The fund InverCap Fondos de Inversión has officially closed, and prior to this, it returned all of the managed resources to its clients. This is due to the funds manager now turning exclusively to focus on the Afore and pensions sectors, according to a statement made by the company.
The closing process began last March. Arturo Hanono, the Chief Financial Officer at InverCap, confirmed to El Economista newspaper that all resources had been returned to clients.
Afore Invercap, which has just celebrated its 8th anniversary in the market, manages more than a million clients’ funds. It offers the best yields in each of the SIEFOREs, according to data from the Consar, the commission that oversees Mexican retirement fund administrators.
April this year, Afore Invercap managed 116.4 billion pesos (about $9.4 billion), while according to data from AMIB, the Mexican Securities Industry Association, the investment fund operator Invercap administered only 546.9 million pesos (about $44 million) at the close of March.
Mexico's President Peña Nieto and the Governor of Banco de Mexico, Agustín Carstens. The Mexican financial reform proposes that banks may invest in each other without merging
Article 12 of the Mexican financial reform proposed by Enrique Peña Nieto’s government and submitted to Congress for approval, seeks to amend the Act to Regulate Financial Groups, and includes changes that shall increase the influence of the executive, allow investments between financial institutions of different groups, strengthen corporate governance and improve administrative procedures, as well as increasing transparency, and allowing foreign governments to acquire shares as minority shareholders in Mexican financial institutions.
Thus, regarding the possibility of allowing investments among financial institutions of different groups, the proposal stipulates that those investments can be carried out through the different financial businesses within those groups; therefore, a bank may have an interest in an insurance company of another financial group without the obligation of having to merge or to buy it.
Currently, the only possibility provided is for the holding company to invest directly and with at least 51% of the capital of financial institutions and complementary or auxiliary services companies, which shall be held by the relevant Financial Group.
The legal system does not currently reflect the reality of the Mexican financial system, which is becoming more diversified and competitive each and every day. In this respect, the Mexican president, Enrique Peña Nieto, included six subsections within the section concerning Financial Groups, in order to “have a regulatory framework that suits the new economic and financial conditions within a globalized environment”.
The subsections refer to:
Modernization of the Corporate Structure. Allowinvestments in financial institutions without having to merge or to integrate them into the group, as long as the holdings of the same do not exceed 50% of the capital of the institution, in which case there will be a merger.
Substantial improvements in Corporate Governance. Strengthening the board of directors and general management by separating responsibilities and by providing the option of creating one or more committees consisting of independent directors.
Improved administrative procedures. With the aim of strengthening the corporate functions that can be carried out within a financial group.
Improvements to monitoring and sanctioning powers. In order to achieve effective consolidated supervision through diverse means of collaboration and the effective exchange of information among national and foreign authorities. Note that this section includes the possibility for foreign governments to participate in the share capital of financial group controlling companies in Mexico.
Responsibilities and corrective measures. Seek to prevent, and where necessary, correct any problems that may arise and which could affect the financial stability or solvency of either the holding company or of the financial institutions that make up the financial group.
Coordinating Committees of financial authorities.Whether temporary or permanent, they shall be chaired by whoever is chosen by the Mexican President; and they will seek to be a forum for the coordination of the measures and actions to be carried out or implement by the Ministry of Finance and Public Credit, the respective departments or agencies of the Federal Government and the Bank of Mexico, to ensure the safety of the financial system of the country.
You may view the full proposal in the following link.
Photo: Paranoid. TERRA13 acquired a portfolio of industrial properties in Mexico for $600 million
Terrafina, TERRA13, a Mexican real estate investment trust (FIBRA) advised by Prudential Real Estate Investors, will purchase a portfolio of Mexican industrial properties from Kimco Realty and its joint venture partner, American Industries for about $600 million, the company announced today. PREI is the real estate investment management and advisory business of Prudential Financial.
“The addition of these assets contributes to the diversification of Terrafina’s portfolio in terms of industry location and tenants”
The portfolio consists of 87 properties totaling about 11 million square feet that are occupied by a diverse range of multi-national tenants. The facilities are predominantly for light manufacturing in the automotive, aerospace and consumer goods sectors.
“The addition of these assets contributes to the diversification of Terrafina’s portfolio in terms of industry location and tenants,” said Alberto Chretin, CEO of Terrafina. “And it is perfectly aligned to Terrafina’s strategy to grow the portfolio through accretive acquisitions as a consolidator vehicle for quality industrial assets.”
With the addition of this portfolio, Terrafina grows to 233 properties with more than 30 million square feet of industrial space, making it the largest owner of industrial assets in Mexico, based on gross leasable area (GLA).
“This acquisition establishes Prudential Real Estate Investors’ ability to source quality properties and integrate them into Terrafina’s existing portfolio,” said Alfonso Munk, PREI’s head of Latin America. “The quality of these properties and the strength of the industrial sector in Mexico made this an extremely attractive transaction.”
Closing is subject to shareholder approval. Terrafina, which expects the transaction to be completed by the third quarter of 2013, will pay for the portfolio through existing credit facilities and the assumption of the existing debt on the portfolio.
Foto: Latin Trade Group. Ramón Leal Chapa de ALFA nombrado Gerente de Finanzas del Año por Latin Trade
The Latin Trade Group announces its selection of Ramon A. Leal Chapa as CFO of the Year. With this award, Leal Chapa joins the ranks of some of the most distinguished financial executives in Latin America.
Under Mr. Leal Chapa’s watch, Monterrey-based ALFA has seen EBITDA double since 2008 to $1.85 billion, and revenues top $15.2 billion in 2012. Over the same period, the company’s stock price has also increased nearly 850 percent – a rate much faster than the average for the Mexican Stock Exchange (BMV). The company has also made capital expenditures totaling $3.4 billion in the past four years – nearly $870 million in 2013 alone. Through a number of key acquisitions, the company has dramatically increased its international profile.
ALFA is a Mexican conglomeration of five companies in diverse industries, including petrochemicals, high-tech auto-parts, refrigerated foods, telecommunications, and a United States-based shale gas producing company. It is the world’s largest producer of aluminum engine components for the automotive industry, and one of the world’s largest producers of polyester. A subsidiary of the company is North America’s leading maker of processed meats, and the largest producer of hot dogs in the United States – producing 1.25 million tons per year. The company has 85 production plants across 18 countries in the Americas, Europe, and Asia, and employs about 60,000 people globally
Truly overseeing a corporation of this size, while increasing profits and share price, is a tremendous feat for any CFO. Leal Chapa joined ALFA in 2009, before which he occupied diverse executive positions at Vitro, including vice president of vice president of Strategic Planning, Mergers and Acquisitions, and vice president of Corporate Finance. Before, he held executive functions in Grupo Pulsar, Vector Casa de Bolsa, and Violy & Partners in New York.
Leal Chapa is a graduate of the Universidad de Monterrey, and holds a Masters degree in Operations Managements from Instituto Tecnologico de Monterrey, and an MBA from Harvard Business School.
Leal Chapa received the award in person at Latin Trade’s CFO Forum in Mexico City. The award has been given to professionals such as the CFOs of Petrobras and Cosan in Brazil, as well as America Movil and Grupo Mexico in Mexico.
LT CFO Forum are private events that offer CFOs, finance directors, treasurers and controllers from various industries in Latin America the opportunity to participate in high-level peer group discussions and interact in a private setting. The events equip CFOs with expert insight that helps them prepare for challenges across domestic and international borders.
Photo: Munerabig. SURA Now Showing Growth in El Salvador
According to La República newspaper, Grupo de Inversiones Suramericana (SURA)has recently informed the financial watchdog Superintendencia Financiera about the creation of a new subsidiary in El Salvador.
To that effect, SURA stated that the company would be called Suam Corredora de Seguros, with a capital base of 50.000 dollars.
The SURA Group’s participation in the organisation will be indirect, through its affiliate Sura Asset Management, which owns 99% of the new company.
Wikimedia CommonsFoto: Miletics Balazs
. Los salarios de los CFO y tesoreros registran el mayor aumento entre los profesionales financieros en 2012
North American finance professionals continue to see pay raises, but percentage increases fell last year for all but the executive tier, according to a survey by the Association for Financial Professionals (AFP). Average salaries for professionals in finance departments of corporations increased by 3.4 percent in 2012.
The 2013 AFP Compensation Survey provides base salary and bonus information for jobs in the finance profession for calendar year 2012 as well as data on base salaries effective on January 1, 2013. AFP has conducted this survey for 25 years.
At the executive level, the average percentage increase was 3.8 percent, up from 3.3 percent in 2011 and higher than in any year since 2008. Among executives, CFOs and treasurers reported the highest increase at 4.3 percent each.
“A low interest-rate environment, increased regulations around the world, complex financial technologies and heightened risks, are a few of the challenges that treasurers and CFOs face,” said Jim Kaitz, AFP’s president and CEO. “Their salary increases reflect the level of responsibility that companies place in their treasurers and CFOs.”
Management-level professionals reported an increase of 3.5 percent in 2012, down slightly from 3.7 percent in 2011. Staff-level professionals saw a 3.1 percent increase, down from 3.5 percent in 2011. Of all tracked job titles, however, Assistant Cash Managers received the largest salary increase in 2012 – 4.7% on average.
Advanced degrees and certifications were linked to higher salaries, especially at the staff level, where MBAs earned about 19.2 percent more than peers without an MBA, but the percentage difference tended to shrink to 8.1 percent at the executive level. Professionals with a Certified Treasury Professionals TM credential at the staff level earned on average eight percent more than their uncertified peers.
Wikimedia CommonsFoto: U.S. Department of Agriculture. BNY Mellon planea incrementar un 50% su fuerza de ventas en wealth management
BNY Mellon is rolling out a major two-year recruiting campaign to increase BNY Mellon Wealth Management’s sales force by 50 percent. In addition, the firm intends to add private bankers and mortgage bankers, portfolio managers and wealth strategists as well as additional sales support staff.
The campaign represents an important new phase in BNY Mellon Wealth Management’s multi-year growth strategy to continue to build presence and capabilities in the US and globally. Despite the sharp economic downturn of 2008, in the past four years BNY Mellon Wealth Management has grown its footprint both organically and through acquisitions. During that time, the firm has made acquisitions in Toronto and Chicago, opened new offices in Dallas, Washington and the Cayman Islands, and added two new offices in Florida, where it now has a total of seven locations. With this initiative, the firm plans to strengthen the sales teams in its current locations and establish offices in other key wealth markets.
By the end of last year, BNY Mellon Wealth Management’s total client assets reached a record high of more than $188 billion, making it one of the 10 largest US wealth managers in 2012, according to Barron’s.
“BNY Mellon is deeply committed to building on the strong momentum we’ve seen in our wealth management business over the past several years,” said Curtis Arledge, CEO of BNY Mellon Investment Management. “The wealth management business is an integral part of BNY Mellon Investment Management. As part of a long-term growth strategy, we are dedicating substantial resources toward strengthening wealth management’s global distribution capabilities and team.”
Foto: Ngsyatowuahg . La fortuna de las 15 mujeres más ricas de China supera los 30.000 millones de dólares
“Female entrepreneurs in China have played an integral role in the country’s growth story,” Mykolas Rambus, CEO, Wealth-X, said. “In the cut-throat world of business, these women have outperformed many of their male counterparts to join the ranks of China’s wealthiest individuals.”
Only three out of the 15 women on the list derived their fortunes from inheritance. The combined wealth of the top 15 exceeds US$30 billion. Eleven women on the list are entrepreneurs. One is an executive at a conglomerate. Here are the top fifteen:
Real estate wealth dominates the list, as total wealth attributed to the sector comprises over 60% of the combined net worth of the 15 wealthiest Chinese women. This reflects the strong potential for growth in the sector even as it grapples with property cooling measures enacted by the government.
Mr. Rambus added, “Wealth creation in China is inextricably linked to real estate. Our list also reflects the reality of China’s real estate market; that increased investment is not only observable in residential and commercial properties, but also luxury hotels and clubhouses. This has given rise to a demand for diverse architectural services, such as environmental landscaping. Indeed, some of China’s wealthiest women are transforming the country’s real estate market.”
