LatAm equity had a strong week, marked by inflows into the region’s main fund groups, according to EPFR Global. Optimism was running high as some investors speculated the current slowdown has hit a bottom, and that commodity prices would remain strong going forward, says EPFR. Brazil equity funds saw inflows of $114.4m in the week ended April 23, which increased its assets under management (AUM) by 3.2% to $14.1bn. Mexico country funds saw inflows of $54.7m, a 3.4% rise in AUM. LatAm equity gobbled up $804.4m, which increased its AUM by 3.6% in the week. In the rest of EM, optimism prevailed, but was more muted. Diversified global EM funds took in $361m while Russia country funds swelled $248m. Year to date, LatAm is the only EM equity fund group to post a collective gain on portfolios, says EPFR. Meanwhile, dedicated LatAm equity funds lost 1.09% in the week ended April 24 on a total returns basis, according to Lipper. China region funds were the biggest gainers of the week, with 7.53%, while EM market funds gained 1.13%. Gold oriented funds experienced the biggest drop of the week, shedding a whopping 10.41%.
Yearly Archives: 2008
Agra, Santander in Mortgage Deal
Santander has agreed to provide BRL2.2bn in mortgages for clients of Brazilian real estate company Agra Empreendimentos Imobiliarios, Agra said. The financing covers 19 of Agra’s projects to be launched in 2008 and 2009, made up of 8,355 housing units. Santander will finance up to 90% of the total value of the units at up to 30-year terms. The deal allows the developer to reduce its exposure from initial construction cost, and direct working capital to other areas.
Cruzeiro do Sul Grows Bond on Demand
Brazil’s Banco Cruzeiro do Sul increased to $110m from $100m its Reg S 2010 bond offering, priced at 99.772 with a 7.38% coupon to yield 7.50%. The Reg S deal saw demand of just over $110m, says a banker managing the sale, from at least 70 different buyers. The Ba1 sale follows Cruzeiro’s $100m 2009 bond sale in February, which opened the 2-year international market for mid-size Brazilian banks. Issuers including Banco Fibra and BMG have joined the parade, demonstrating that this size and tenor is useful to raise funds while waiting for credit conditions to improve. BCP and UBS managed the sale.
Chilean Firms Price Local Notes
Chilean grocer Distribucion y Servicio has priced $263m in 2013 bonds denominated in the UF inflation-linked rate, at 96.94 with a 2.60% coupon to yield 3.30%. D&S plans to prepay short-term debt with proceeds. Larrain Vial managed the sale. Separately, water utility Aguas Andinas priced $109m in UF-denominated 2014 bonds at 98.940 with a 3.000% coupon to yield 3.223%. Larrain Vial and BBVA led the transaction for Aguas, a unit of Barcelona’s Sociedad General de Aguas. The company recently agreed to pay an estimated EUR105m for 51% of Empresa de Servicios Sanitarios de los Lagos.
InterGen Launches $310m Mexico Financing
Power generator InterGen has launched a $310m debt package to support its purchase of two plants in Mexico from Canadian utility TransAlta. A $210m 14-year term loan is priced at 135bp stepping up to 160bp over the life of the loan, as is a $100m 5-year revolver. The Massachusetts-based generator bought a 511MW portfolio consisting of the 252MW Campeche facility at Palizada in the Yucatan Peninsula and 259MW Chihuahua in Juarez. Both have 25-year PPAs with state utility CFE. Calyon, WestLB and Export Development Canada are the MLAs.
Brazil’s Daycoval Plans ADRs
The board of Brazil’s Banco Daycoval has approved a listing of ADRs in New York. The mid-size bank, which did not unveil a timetable for the operation, expects an increase in the liquidity of its existing shares with the operation. Two Daycoval preferred shares will represent each ADR. In June 2007, Daycoval raised BRL1.1bn in a Bovespa IPO.
Gerdau Draws in US Heavyweights
Gerdau received north of $5bn in orders for its $2.4bn follow-on last week, which marked the company’s first equity foray in 13 years, say bankers on the deal. A large proportion of the book for Metalurgica Gerdau was large US institutions, says a banker on the deal. “It was encouraging to see so many big US accounts in the book,” says an investor who participated. The offering came at a discount of 3.7%, which might have been a hefty markdown had the shares not risen 21% since it was announced in January. A substantial discount gives participants an extra lift in the face of an already strong stock, trading at a high multiple of 8.0x-8.5x, according to the calculations of one buysider. The transaction propels global coordinator Itau BBA to the top of the LatAm league tables with $1.45bn in credit across four deals, representing 30% of the year’s underwritten volume, Dealogic data shows. JPMorgan, the joint bookrunner follows in a close second place with $1.2bn across three deals.
Gerdau Lands $2.6bn in Jumbo Equity
Brazilian steelmaker Gerdau raised $2.4bn in a multi-part equity follow-on last week, the biggest equity offering of the year. It stands to get an additional $225m if leads succeed in exercising a greenshoe. Metalurgica Gerdau, the parent company, got BRL1.37bn by selling 11.1m shares at BRL78.35 each. Subsidiary Gerdau SA raised BRL2.65bn through the sale of 27.3m units at BRL60.30. That includes 313,761 ADRs offered at $36.00. Both the Metalurgica and Gerdau SA offerings include portions of ordinary shares, which holders issued to avoid self-dilution. The more liquid preferred shares, however, made up the bulk of the offering.
Le Lis Blanc: The Incredible Shrinking IPO
Le Lis Blanc has cropped its IPO once again in an attempt to convince investors to buy, though diminishing liquidity continues to undermine the deal. The Brazilian clothing company, which earlier this month said it was targeting an offering of BRL300m ($180m) by selling 26m shares at BRL10.50-BRL12.50, had to cut to a range of BRL7.50-BRL9.50 last week. That would have raised it BRL221m at the midpoint. Friday, the company said it would continue to try and price an offering, scheduled for today, but would not be selling any secondary stock, just 19m primary shares. So at a newly revised range of BRL7.50-BRL8.50, the transaction now stands to bring in just BRL150m, or roughly $91m. While the resistance the company faces is not surprising – investors have been very negative on illiquid IPOs since the second half of last year – Le Lis Blanc’s undying will to price despite so much adversity is notable. Most companies facing this kind of pushback recently have simply dropped out and sought other financing alternatives. Private equity shop Artesia is Le Lis Blanc’s most significant shareholder. Merrill Lynch and Morgan Stanley are leading the IPO.
Oi-Brasil Telecom Dials Jumbo BRL Loan
The long anticipated acquisition of Brasil Telecom (BT) by Telemar’s Oi, announced Friday, sets the stage for jumbo M&A financing that could exceed BRL16bn in size. Oi agreed to buy the equity in BT for BRL5.86bn. But it is heard having to shell out an additional BRL11bn to cover all of its subsidiaries’ debt and equity, including minority shareholders in those entities. Telemar is meanwhile narrowing down a list of lenders on a facility said last week to be in the BRL16bn size area, according to bankers. The company will seek to raise as much as possible in local currency, providing an interesting data point for BRL syndicated lending, which remains undeveloped. According to a statement filed with the CVM, Credit Suisse is the buyer of record for 100% of the shares in Invitel, the holding company that controls BT. The investment bank is also acting as an endorser and intermediary for Telemar in the deal, says the contract. Credit Suisse advises Oi while Citi is working with BT.