Peru's political turmoil casts a shadow over Camposol IPO
December 22, 2017 |
Camposol remains on track to launch an IPO in January, but bankers say they are paying close attention to market sentiment
Peru's President Pedro Pablo Kuczynski (PPK) has survived an attempt at impeachment by the opposition-controlled Congress.
Bond markets remained relatively muted in the build-up to the vote. Peru's 2027 and 2050 sovereign bonds were down roughly a point in secondary trading this week.
But the political turmoil may cast a shadow over a planned IPO by Peruvian agro industrial company Camposol.
The Lima-based company has been marketing plans for an offering but could postpone it until the political noise subsides.
"Any noise is troubling," one ECM banker said. "It is hard enough to convince people to buy Peru stocks."
Sources said investors remain wary of investing long-term in frontier markets, especially sectors outside of infrastructure.
"Even though Peru's growth has developed, investors can't seem to forget its frontier status," another banker said. "It is almost like they [investors] are looking for an excuse not to invest in frontier markets."
Earlier this year, Peru's IC Power canceled a planned IPO just hours before it was scheduled to price.
"Anything the least bit worrying can push investors away," another banker said.
Camposol is still on course for a mid-January launch, but whether it goes forward will depend on market sentiment during the first week of the New Year, a banker familiar with the company's plans said.
"They [underwriter] may give it more time, we need to see how markets react when everyone is back from holidays," the first source said.
Kuczynski narrowly survived the impeachment vote. A two-thirds marjority, or 87 of 130 votes, was needed to remove him from office. Lawmakers voted 78 to 19 with 21 abstentions, failing to garner enough support for the motion.
The vote came after allegations surfaced linking Kuczynksi to a graft scandal involving Brazilian construction firm Odebrecht. His critics said he had committed perjury during a congressional inquiry when he stated he had no professional links to the company. Bu it was later revealed that a company owned by Kuczynksi had recved more than $700,000 from Odebrecht.
Peru's Congress is controlled by opposition party Fuerza Popular, led by Keiko Fujimori, and there is little love lost between the pair after Kuczynksi narrowly defeated Fujimori in the 2016 election.
Since the threat of impeachment surfaced last week, Peru's stock market has fallen 3.4%. Peru's sol lost 1.2% against the dollar and its local currency bond yields have widened by 25bp.