Following a surprise $2bn dollar bond placement last week, Mexico plans to boost its domestic bond sales in Q1 2009, Hacienda says. It will double sales of its 20 and 30-year fixed-rate bonds to MXP2.0bn every 6 weeks and also sell MXP2.5bn in 10-year bonds every 6 weeks, up from MXP1.0bn in Q408. The government also aims to auction MXP4.5bn of its 3-year bond monthly, up from MXP3.1bn currently. The new plans come after it pared back sales in October of its long-term peso bonds through year-end, and offered to buy back up to MXP40bn of bonds. The repurchases will not continue. Mexico reopened international bond markets for EM issuers with a tightly priced $2bn 10-year 5.950% benchmark via Morgan Stanley and Goldman Sachs that took out a third of the sovereign’s 2009 funding needs.
Yearly Archives: 2008
Telefonica Merging Peru Operations
Telefonica del Peru, a division of Spain’s Telefonica, says shareholders have approved a merger with Telefonica Moviles Peru, also owned by the Spanish company. The union is slated to be effective December 31. As part of the deal, TdP says it will absorb all of Telefonica Moviles’ shares. As a result, its market cap will increase to almost $933m from about $839m, according to the firm. Victor Miranda, an analyst with Pacific Credit Rating in Peru, says the move will make TdP the market leader in mobile communication, as Telefonica Moviles has a 60% share. The second largest player is Claro, with a market share of about 30%, says the analyst. Officials from Telefonica and its Peru subsidiaries were not available for comment.
UBS Neutral on D&S After Bid
UBS Pactual has given a neutral rating to DyS stock after Wal-Mart announced plans to acquire the company for about CLP259.4 per share, or $2.8bn. UBS believes that “revenue expansion is the most significant challenge for DyS . . . as penetration of supermarkets in Chile is high [and] non-organic expansion plans for the largest players appear limited by the country’s antitrust authorities and competition is very strong.” The shop also says DyS faces the challenge of expanding internationally to get exposure to less mature and faster growing markets, which supports expectations of a possible foray into the Peru market, where Wal-Mart does not have a presence. “DyS had already opened an office in Peru and had plans to open stores in a smaller format. But with Wal-Mart, it is possible they may decide to open larger format stores,” says Francisco Errandonea, head of equity research at Santander Investments in Chile. Meanwhile, Fitch has placed DyS ratings on rating watch evolving. The agency believes the acquisition would benefit DyS because of Wal-Mart’s operating expertise and financial profile. Fitch had placed DyS ratings on negative outlook on December 12.
Infonavit Caps Tough Year for Mexico RMBS
Mexican lender Infonavit has sold MXP2.16bn in 2030 UDI-denominated RMBS, its final transaction in a challenging year for mortgage-backed issuers. The deal was split into 2 equal tranches which amortize one after the other, pricing at 5.55% and 6.25%, respectively. The transaction was marketed openly but placed entirely with a single Mexican financial institution, Jose de Jesus Gomez, director of Infonavit’s RMBS program, tells LatinFinance, declining to name the buyer. “The most important thing we’ve done this year is show we can adapt our strategy to achieve our objectives,” he says. In November, Infonavit sold a MXP3.65bn private placement when markets were especially tough. Gomez says continued flexibility will be needed in 2009, though it is too soon to tell to what extent the markets could recover. Banamex, Deutsche Bank and HSBC managed this week’s transaction.
Petrobras Rolls Short Debt to 2011
Petrobras has pushed out 2009 debt with 2 Brazilian banks until 2011. Brazil’s state-controlled oil producer has extended to 2011 export credit loans of BRL400m and BRL1.6bn taken out in April that were due April 2009. The loans pay DI plus 102%, according to a spokeswoman, who declines to state the new price, saying only that new rates are below 6%. Separately, Petrobras paid down a BRL2.0bn credit facility taken out with Caixa in October, and at the same time extended it by an additional BRL1.5bn through 2011. Petrobras wrapped up financing needs for 2008 last week, securing a JPY75bn ($750m) 10-year loan from Sumitomo Mitsui, Mizuho and Tokyo-Mitsubishi, with a guarantee from export credit agency NEXI.
Bradespar to Refi Part of Promissory Notes
Bradespar plans to issue BRL690m in 180-day promissory notes at 113% of the DI rate, it says. The equity arm of Bradesco, which holds stakes in companies including Vale and CPFL Energia, will use proceeds to repay BRL1.4bn in 180-day promissory notes issued in June at 106% of DI. It had originally aimed to issue 3-year debentures to cover the short-term debt. Bradesco, UBS and Espirito Santo are managing the transaction.
Neoenergia Gets BNDES Credit
Brazil’s BNDES development bank has approved a BRL2bn 5-year credit line for electricity holdco Neoenergia. Funds drawn will pay a spread over TJLP and support a 2008-2012 investment program at regional utilities Cosern, Coelba and Companhia Energetica do Ceara. Neoenergia is a subsidiary of Spain’s Iberdrola.
Swiss Shop Dominates Shrunken Fee Pool
Credit Suisse consumed the lion’s share of this year’s much smaller investment banking fee pool, aided by a solid year for M&A. The shop bagged $225.9m from in the year to December 18, or 17.8% of the market, from a combination of M&A, ECM, DCM and loans revenue, Dealogic data reveals. This compares to $398.1m (16.1%) for Credit Suisse LatAm investment banking in 2007, when the LatAm fee pool was almost 50% bigger. The Swiss shop finishes well ahead of second placed UBS ($131m, 10.3%) and third placed Citi ($115.9m, 9.1%) and benefits from a relative windfall in M&A. Credit Suisse made $102.4m from M&A this year, 20% of the market and far better than second placed Citi ($66.7m, 13%) and UBS in third ($57.6m, 11.3%), Dealogic numbers show. Credit Suisse almost doubled its M&A revenue year-on-year, from $56.9m (11.3%) in 2007. Overall, the LatAm fee pool for M&A, ECM, DCM and loans has contracted to $1.269bn, from $2.473bn the year before, according to Dealogic. This is a far cry from the bullish expectations of some investment bankers at the start of the year, particularly those that rapidly created oversized Brazil operations. The one lucrative business this year was M&A, where the fee pool expanded a slim 1.2%, while everywhere else shrank significantly. Bankers are braced for a tough 2009 as the global financial crisis continues. M&A looks relatively positive in terms of pipeline, while the outlook for DCM, ECM and structured finance is bleak. Local markets should continue to tick over in the bigger markets. The only potential competitive bright spot is the fact that several institutions will likely scale back their regional investment banking presence or withdraw completely.
Colombian Wireless Snares $125m Loan
Colombia Movil, operator of the wireless brand Tigo, has secured a $125m loan through its parent, Luxembourg-based Millicom. The 5-year facility through ABN AMRO pays Libor plus 450bp, according to a banker with knowledge of the transaction. Rather than syndicate the deal, ABN has agreed to sell pieces to institutional investors in northern Europe, leveraging Millicom’s status there. With about 10% of Colombia’s wireless market, Colombia Movil will use funds to continue expanding its network. The telecom secured $600m in loans from the IDB last year. Millicom bought Colombia Movil for $479m in 2006. In October, ABN joint led with Standard Bank a $200m bridge loan to help fund the $510m acquisition of El Salvador-based cable provider Amnet.
Fitch Affirms Buenos Aires Ratings
Fitch has affirmed the City of Buenos Aires with a stable outlook. The agency leaves the ratings of the city’s euro medium-term note program and long-term foreign and local currency at B. The ratings, says Fitch, reflect strengths in the city’s credit profile, including its large and diversified economy, an adequate liquidity position, sustainable debt levels and manageable debt-service repayment schedule. Also reflected is the city’s financial flexibility which is due to a majority portion of its total expenditure being financed with local sources (88%), as opposed to only 12% representing federal transfers. Eduardo D’Orazio, an analyst at Fitch, says the city is making sound decisions regarding its debt. Since restructuring in 2002, the city has met debt obligations in a timely fashion, notably during 2006 and 2007, when the highest levels of amortization occurred. This is reflected in a recent improvement in debt ratios. As of May 2008, only two series out of five originally issued are outstanding. One of the series outstanding is due in 2009 and the second in 2011. Together, they total $267m in debt, says D’Orazio. “The city was about to issue $500m in debt for public works, but decided to postpone it due to the global financial crisis, which I think is a good decision,” he adds.