S&P affirmed its BB minus rating on PDVSA and kept the outlook at stable. “The ties of ownership and economic interests between PDVSA and Venezuela are evident in the significant contribution of the oil industry to government revenues (50%) and the country’s exports (90%),” says S&P. The sharp increases in direct social spending by PDVSA and recent investments in non oil-related assets provide further support to the action, adds the agency. The stable outlook reflects S&P’s expectations that PDVSA’s financial performance will deteriorate in the next couple of years as a result of higher leverage, and that production figures will remain around 2007 levels.
Yearly Archives: 2008
Posted inDaily Brief
Gerdau Set for Pricing Today
Metalurgica Gerdau and Gerdau SA will today offer a combined $2bn in shares in the form of Bovespa-listed stock and NYSE-listed ADS via Itau BBA and JPMorgan. The deal should be the year’s largest so far and is expected to be successful, given its size, and the impressive track record of the issuer. The Brazilian steelmaker has expanded its business abroad significantly in the past five years, including two LatAm acquisitions this past month.
Posted inDaily Brief
Batista to Take OGX Public
OGX Petroleo e Gas Participacoes, the oil and gas venture owned by Brazilian billionaire Eike Batista, is planning an IPO on the Bovespa’s Novo Mercado. The company has not yet disclosed a timetable or financial details of the operation. UBS Pactual is managing the sale, with Credit Suisse, Merrill Lynch and Itau as joint bookrunners. Batista created OGX last year to bid on large drilling and exploration contracts in Brazil, and it won the most blocks in a BRL1.62trn bidding round in November, beating even Petrobras. In December, OGX raised BRL2.29bn in a private share offering through Credit Suisse, UBS Pactual and BMO. The new shares will trade under the ticker symbol OGXP3.
Posted inDaily Brief
Chileans Return to Changed Loan Market
After months of being away from the international loan market, Chilean credits, which command some of the tightest margins in the region, are returning to a vastly changed landscape. Endesa Chile and CMPC are heard to have sent out RFPs for new facilities which combined could total up to $850m. Despite an investment grade zip code, the two companies may experience significant upwards adjustment in margins. Endesa, is heard to be seeking a bullet loan of between $400m-$600m with a tenor of up to six years. One banker who was not invited to pitch guesses the credit could raise funds at Libor plus 60bp-75bp in today’s market. In February 2007, Endesa raised a $200m standby revolver at Libor plus 25bp. CMPC, a paper and pulp conglomerate, is also heard out with request for pitches on a $150m facility.
Posted inDaily Brief
Mexican Logistics Group Preps ABS
Mexico’s Grupo TMM is preparing a MXP1.55bn issue of 2028 bonds backed by an oil service contracts it has with Pemex. The revenues will come from five service ships it has contracted to Pemex facilities for five years. The sale, being managed by Value Casa de Bolsa, is expected in the next two weeks.
Posted inDaily Brief
IDB Approves Loan to Chile’s Public Transport
The IDB has approved a 16-year $400m non-sovereign guaranteed loan to provide financial support to Transantiago, the public transportation system of Santiago, Chile. The proceeds will be managed by Transantiago Financial Administrator (AFT), the private sector entity responsible for the system’s payments and collections. The loan will also support Chile’s comprehensive plan to improve the operation and quality of Transantiago’s bus and subway services, which are used by some 5.4m passengers a day. The IDB is also preparing a $10m loan for a program led by Chile’s Ministry of Transportation and Telecommunications to establish the Metropolitan Transportation Authority, which will monitor Transantiago’s services.
Posted inDaily Brief
Clothing IPO Teeters After Dropping Price
An IPO for Brazil’s Le Lis Blanc, which was scheduled to price yesterday, teetered on its way to public markets. The private equity-backed retailer and manufacturer dropped the price range to BRL7.50-BRL9.50 from BRL10.50-BRL12.50, say people familiar with the transaction. “The bankers are doing a great job here, but the reality is that the new issue premium is brutal out there,” said an ECM chief away from the deal. Le Lis Blanc is heard trying to price its deal today. The offering, already flagged by investors as vulnerable given the small size of its initially proposed IPO, will raise a maximum of BRL252m – by all measures challenging, especially given investors dislike for illiquidity. People close to the company suggested earlier this year that the timing of the offering was being driven by Artesia, the financial sponsor, which was seeking to capitalize Le Lis Blanc. Merrill and Morgan Stanley have the books.
Posted inDaily Brief
Follow-Ons Worth BRL842m Boost ECM
Two Brazilian issuers succeeded in bringing follow-ons on Tuesday and Wednesday, contributing to a pick up in equity markets. Copasa, the water treatment and sewerage utility, managed to price BRL400m in secondary shares held by the state of Minas late Wednesday at BRL24.50 say bankers on the deal. That is a 2.9% discount to the Wednesday closing price of BRL25.50, and a 22.4% discount to the closing price prior to the announcement of the deal November 30. The offer, made up entirely of secondary shares, helped boost liquidity in the stock. Citi and BB Banco de Investimento led. The previous night, education company Anhanguera landed a follow-on that grossed BRL442m before a greenshoe. The shares were offered at BRL26.00, a 1% discount to the session’s close and a 5.4% discount to the last trade before the announcement of the deal on March 10. Credit Suisse, Merrill and Santander led.
Posted inDaily Brief
Caribbean Exchange Linkup Delayed
The launch of the Caribbean Exchange Network, which connects the exchanges of Barbados, Jamaica and Trinidad and Tobago, has been delayed by several months, Marlon Yarde, CEO and general manager of the Barbados Stock Exchange tells LatinFinance. An original launch date was set for this month, but members are now shooting for the end of Q3. The exchanges submitted a proposal for the linkup to their respective regulators and since then, very little has happened, says Yarde. The joint platform would bring a much needed critical mass to markets in the area, encouraging “more activity in the markets, improved liquidity, better prices and more opportunity for investors to create wealth,” says Yarde. A second phase of implementation would allow the exchange to create an international gateway to facilitate trading from institutional investors, and also incorporate other Caribbean exchanges, he says.
Posted inDaily Brief
Fitch Upgrades EDC
Fitch has upgraded Venezuela’s Electricidad de Caracas (EDC) to BB minus from B+, and assigned a rating of BB minus to the $650m in 8.5% 2018 bonds placed in the local market April 2. The proceeds went towards repayment of a $247m bond buyback concluded last month, and for other corporate purposes, says an EDC spokeswoman. Buyers of the EDC bonds paid in local currency and received dollar-denominated notes, a strategy the government uses to keep the black currency market in check. The rating comes as many holders may sell bonds to international investors. Fitch’s upgrade is based on strong support from controlling owner PDVSA and the government, it says, despite increasing leverage and tariff uncertainty.