LW Investment Management is launching a new vehicle with a special focus on LatAm. The LW Emerging Markets Opportunities fund expects to raise $150m for asset based lending and equity throughout EM. In mining and natural resources, the investor is looking at Colombia, Peru and Brazil, where LW already has investments in precious metals. “We are a different fund because we are focused on fixed income with a stable component of profits and cash flow, and we will be looking for strong alpha in the natural resources, mining and oil sectors,” fund manager Carlos Zalles tells LatinFinance. The fund, which already has $25m under management, also sees opportunity in distressed government and corporate securities, as well as local currency. “We are in tune with the unpredictability of markets and the limitations of modeling. In EM, the biggest risks usually rest in the events that investors expect least,” says Zalles. The fund is domiciled in the Cayman Islands and headquartered in Milan. It has affiliated offices throughout LatAm.
Yearly Archives: 2008
Telmex Prices MXP1.6bn Bond
Mexico’s Telmex has priced MXP1.6bn in 2018 bonds at 8.27%, or 64bp over the comparable government bond. The AAA deal was 1.9x oversubscribed and had been expected to price at 65bp over, according to a banker on the sale. Telmex will use proceeds for general corporate purposes, including the expansion and upgrading of its network. Inbursa and HSBC managed the sale.
Mexican Homebuilder Preps Local Bond
Mexico’s Sare Holding is preparing to issue MXP1.5bn in 2013 bonds. The homebuilder and developer plans to use proceeds to refinance debt and for other working capital needs. The A3 locally-rated deal is anticipated in early May. BBVA is managing the sale. Sare is a homebuilder engaged in the development, construction, marketing and sale of affordable, middle income, residential and tourist housing developments in Mexico.
BicBanco Raises $130m
Brazilian mid-sized bank BicBanco has priced $130m in 2010 dollar-denominated bonds at par with a coupon of 7%. Demand reached $150m, according to a bank official, but the deal was held at $130m to maintain the 7% yield. Demand came almost entirely from US and European buyers, with very small number of Asian buyers. Proceeds will fund the bank’s working capital. Banco do Brasil and Banco Votorantim managed the sale. BicBanco, rated BB-/Ba1, went on a roadshow via UBS in January, but put off a deal due to market volatility. Fellow mid-size Brazilian Banco Fibra priced $150m in 2-year notes Fibra at 99.534 with a 6.750% coupon to yield 7.000% last week. Banco Cruzeiro do Sul is set to launch a similar transaction as soon as next week.
Titulizadora Colombiana Prices RMBS
Colombian mortgage securitization company Titularizadora Colombiana has placed COP207bn ($116 million) in RMBS. A COP148bn 2018 senior tranche priced at 11.15% and saw about COP320bn in demand, according to a Titularizadora official. A COP42bn 2023 senior tranche meanwhile priced at 11.5%. Two 2023 subordinated pieces totaling COP17bn came at 12.5% and 13.0%. The senior debt is rated AAA by Duff & Phelps. The bonds are backed by a portfolio of mortgage loans from Banco Colpatria and Banco Davivienda. Bancolombia, Afin, Interbolsa, Corficolombiana, Banco de Bogota, Correval and Banco Davivienda managed the RMBS sale.
CFE $2bn Loan Browns Out
Mexican power utility CFE is having a very difficult time raising a $2bn loan facility, thanks to what bankers call overly ambitious pricing. The 3-year senior revolving facility, hailed as a benchmark due to its size and investment grade rating, has been in the market for 6 weeks, but little progress has been made. Just two MLAs, SocGen and Inbursa, have been confirmed so far though bookrunners claim others are slowly coming in. Bankers away from the deal say the 40bp margin offered simply does not appropriately compensate most banks, whose funding costs have risen much higher. “It’s not worth it even for the relationship,” says a banker whose shop chose not to participate. “Right now, there are so many other excellent credits out in the market that are offering much higher margins, and people are choosing those over CFE,” the banker adds. The problem is that CFE appears unwilling to flex up, feeling that 40bp is already a significant premium to its pricing during better times. Bankers on the deal say the company has resorted to dealing directly with potential lenders to reassure them of any doubts. Meanwhile, executives away from the process allege that CFE is leaning on relationship banks already on the deal to pony up more cash to get the thing done. MLA tickets of $150m come with a 35bp fee while $100m tickets pay 30bp. BBVA, RBS, BNP and Santander are bookrunners, with Citi also participating in a senior role.
Credit Suisse Punches Back with Merrill Hire
Credit Suisse took a quick payback swipe at Merrill Lynch by poaching Enrico Carbone for its Brazilian investment banking division. Last week, Merrill hired Credit Suisse’s Adriano Borges, head of real estate investment banking in Brazil, naming him managing director in charge of real estate and technology. Yesterday, CS said it hired Carbone, a director at Merrill in charge of various sectors, including retail, healthcare, technology and industrial services, to replace Borges. He will report to Jose Olympio, head of investment banking for Brazil, covering real estate and technology, among other sectors. The Swiss shop is responding swiftly to the recent Merrill raid, which has claimed two Credit Suisse scalps. But it remains to be seen if the swap was equitable. Whether because of lucky timing or skill, Borges is seen as something of a rainmaker, having ridden a wave of real estate equity offerings over the past two years. That Merrill awarded him an MD title says something about its interest in the banker, who was only a director at CS. And while Carbone has earned no such change in title, he’s moving to a shop with much longer track record of success in Brazilian investment banking. CS dominated LatAm equity in 2007, topping the league tables, and came in second in M&A by fee volume. The tit for tat between the two shops may cool down for the moment. Merrill made a point of saying last week that the Borges hire concludes its most recent hiring push in Brazil.
Citi, UBS Diverge on LatAm Equity Call
Two of the region’s big research shops are presenting investors with conflicting calls on the relative value of equities in Mexico and Brazil. Citi yesterday restated its preference for Mexican equities over Brazil based on the view that Mexico’s falling interest rates will benefit stocks. Citi sees Mexican rates falling by as much as 125bp to 6.25% by year-end, while in Brazil, it believes the tightening cycle could take the Selic on a 175bp run to 13.00% in the same time period. UBS Pactual, on the other hand, says the rate increases are already priced into Brazilian equities, and that solid growth and strong commodity prices will boost earnings. In Mexico, where equities have outperformed so far this year, investors are already pricing in that country’s resilience to the US downturn, says UBS. Brazil will announce its decision on rates today, with economists expecting a 25bp-50bp rise, while Banxico will announce its decision to lower or keep rates unchanged on Friday.
Investor Interest in LatAm Equity Wanes: Survey
LatAm is less appealing of an emerging market for equity investors than it was a month ago, according to the latest Merrill Lynch fund manager survey. The region, and in particular Brazil ranked high among investor favorites last month, as evidenced by their overweight positions. But this month EMEA, and in particular Russia, now enjoy the highest overweight positions, with the latter accounting for most of the change, thanks to a substantial surge in the past month. Chile and Mexico are still in the underweight category of EM countries, along with most of the asset class save for Turkey, Thailand, Brazil and Russia. And EM as a whole is no longer the top equity pick for global managers, says Merrill. “The US is now the most preferred global equity market by consensus for the first time since November 2001,” says the report, though EM still beats out Europe and Japan equities. Within EM, the main drivers for investment choices appear to be domestic demand and consumer plays, rather than US demand or commodity-oriented plays.
Mexico May Hold on Rates
Mexico’s central bank is expected by many economists to leave the policy rate unchanged at 7.50% after its meeting on Friday. “It is premature to talk about rate cuts at this juncture,” says Alberto Ramos, an analyst at Goldman Sachs. “First, because both headline and core inflation are still outside the central bank comfort zone. Second, there is no immediate need to increase the monetary stimulus to the economy in order to support activity, as the recent activity leading indicators have turned out stronger then expected,” he adds. But not everyone shares that view. In its daily report yesterday, Citi said it believes in a 25bp cut in the rate as part of a preventative measure in the face of a weakening US economy.