Fitch has affirmed TGI’s foreign and local currency issuer default ratings at BB and cut its outlook to negative from stable. The cut reflects the weakening prospects for Argentina’s TGI to reduce debt leverage over the near to medium term as originally expected, says Fitch. TGI has $750m of outstanding senior unsecured notes due 2017. Fitch says that TGI’s leverage level is 4.2x Ebitda of $215m. Elsewhere, Fitch says Telefonica Chile’s outlook is stable, citing strong liquidity position, cash flow and manageable debt maturity. The agency believes the company, which is 97% owned by Spain’s Telefonica, will generate cash flow of $100m to $150m over the next few years. It also expects total debt to Ebitda to remain stable at or below 2.0x. Fitch also affirmed the company’s local and foreign currency issuer default rating at BBB+.
Yearly Archives: 2008
BBVA Bancomer Readies Local Bonds
BBVA Bancomer wants to sell up to MXP3bn in 2020 bonds in the local market as soon as next week. The notes are rated AAA on a national scale, and will pay a coupon set to the TIIE interbank rate. Mexico’s largest bank is also shooting to raise up to MXP6.4bn in 2029 peso-denominated RMBS later this month, if market conditions are favorable. BBVA’s own capital markets unit is managing both transactions.
Ashmore Predicts Early 2009 EM Rally
Despite continued price drops and fund outflows, EM investor Ashmore is predicting a V-shaped recovery for EM and a rebound early next year. “As confidence returns and liquidity increases in early 2009, we expect prices depressed by forced sales to gap up,” says head of research Jerome Booth in a note released Monday. “Hence we believe the opportunity to invest is now,” he adds. According to Booth, there have been significant structural changes for EM debt since the 1990s, including better fiscal and monetary management, large reserve levels, low solvency risk and a much more institutionalized and less levered investor base. Ashmore notes the need for more to be done by policy-makers, banks to start lending again, and increased access to trade finance. But it is characteristically upbeat about the potential for an EM rally. “We expect a V shaped recovery in emerging market growth with economies growing strongly again from the first half of 2009 in many cases, though in developed countries the recession and de-leveraging may take much longer,” says Booth. He anticipates a return of secondary market liquidity following the end of developed world investment bank year ends in November-December. The investor also sees more hedge fund redemptions and associated unwinding, with the process continuing through the first half of 2009. “Also in January, new allocations are expected to be made by those waiting for calendar year end and by those who traditionally make asset allocation decisions in January,” Booth concludes. Ashmore has $32bn under management in EM.
Embratel Heads Off USD Maturity
Brazil’s Embratel has launched a BRL400m issue of 180-day promissory notes paying 118.5% of DI. The telecom provider – which is controlled by Mexico’s Telmex – plans to use proceeds to pay off $178.8m in 11% coupon dollar bonds issued in 2003 that mature December 15. Caixa Economica Federal is managing the sale, which follows several Brazilian corporates’ use of the promissory note market, most recently Telemar’s BRL2bn in 1-year to complete the purchase of Brasil Telecom. Embratel’s investment-grade rival secured funding at DI plus 3%.
Telemar Goes Short to Complete BT Buy
The board of Telemar has approved the issue of BRL2bn in promissory notes to complete its takeover of Brasil Telecom. The 1-year notes will pay DI plus 3%. Bradesco is managing the operation, with Itau and Santander as co-managers. The telecom provider also known as Oi has already this year sold BRL3.6bn in 1-year promissory notes and borrowed BRL4.3bn in the form of 2016 CCB credits from Banco do Brasil to fund the BRL13bn purchase. The need for additional notes comes after a $1bn dollar bond issue failed in September. Last week, Brazil’s government made the necessary legal changes to clear the way for the purchase of BT, which now awaits final regulatory approval. Telemar and BT set a closing deadline of December 21, with the former having to pay the latter a BRL500m fine if it not closed by then. HSBC expects BRL3.8bn in synergies from the tie-up, from workforce reductions, consolidation of IT and operations systems, longer-term capex savings and revenue synergies from the combination of fixed line assets. The shop adds it expects the deal to be approved before December 21.
BNDES Opens BRL6bn Working Capital Fund
Brazilian development bank BNDES has launched a BRL6bn credit line to support the working capital needs of Brazilian companies in the industry, commerce, and non-construction service sectors. The special credit program will make funds available until June 30, at a limit of BRL50m per loan. Funds can be taken out for up to 13 months at rates up to 20.5%, varying according to individual borrowers.
Brazilians Continue Share Buybacks
Bradesco and Brazilian healthcare provider Tempo are the two latest Bovespa members to repurchase sagging shares. Bradesco plans to absorb up to 7.5m preferred shares and up to 7.5m common shares in a program running through May 2009. The bank has a total of 2.04bn shares outstanding, including 551m common and 1.49bn preferred units. Tempo, a healthcare network administrator and claims processor that raised BRL420m in a December 2007 IPO, has meanwhile approved a 1-year program to purchase up to 7.5m shares, or 10% of its float. Bradesco’s common and preferred shares closed Monday at BRL20.19 and BRL23.47, respectively. Tempo finished at BRL2.50.
Italian Operator Picks Up Brazil, Chile Highways
Italian toll road operator Atlantia has agreed to buy stakes in Chilean and Brazilian highways from Spain’s Itinere for EUR420m. The sale is a part of a larger deal also agreed Monday, in which Spanish infrastructure operator Sacyr Vallehermoso is selling Itinere to Citi Infrastructure Investors for a total consideration of EUR7.9bn. The package divested to Atlantia consists of stakes in 6 Chilean and 1 Brazilian road concessions, and maintenance companies, totaling 702km. Atlantia sees the highways contributing EUR60m in Ebitda. The deal is expected to close in Q1 2009, following Citi’s launch of a tender offer for Itinere on the Madrid Stock Exchange.
Barcelo Buys Guatemala Hotel, Eyes Nicaragua
Spain’s Barcelo Hotels & Resorts has acquired the Hotel Guatemala City for $42m in cash, and will rename it Barcelo Guatemala City. The hotel was purchased from Marriott International. A Barcelo spokesman says the company did not use outside advisors for the deal. He also says Barcelo is in talks to either acquire a hotel in Managua or sign a contract to manage it and expects a deal to be completed early next year. The Guatemalan and Nicaraguan hotels will be part of Barcelo’s business hotels, says the official, adding that the company is interested in expanding this sector. “We would like to open a business hotel in Panama and expand in Mexico,” says the source.
Cosan Wraps up Esso Purchase
Brazilian ethanol producer Cosan has concluded its $890m purchase of Exxon Mobil’s Brazilian distribution assets, known as Esso. The deal includes $715m for all of the shares of the unit plus $175m in assumed debt. The transaction propels Cosan into a new category of corporate – changing it from a large sugar and ethanol producer into an integrated fuel company with the fourth largest distribution network in Brazil. Cosan had a $500m standby line of credit for the deal with Bradesco, according to a JPMorgan report issued yesterday, which in announces the shop’s initiation of coverage of Cosan shares. With an additional $400m capital injection from its parent company, the deal was set to be concluded without any major hitches, says the report. “Even accounting for Esso payments, the company should be in a relatively comfortable leverage position. It benefits from having very [long term] debt maturity, including $450m in perpetual bonds with an 8.25% coupon rate.” Still, the company’s high leverage of around 10x trailing 12-month Ebitda should prevent the it from being an aggressive large-scale acquirer in the near term, says the shop. “Although Cosan no longer has restrictive covenants on its leverage ratios, a [net debt to Ebitda] of 3.8x-4.0x is high enough to limit significant further spending on M&A until this leverage is brought down,” according to JPM analysts.