Federal housing fund Infonavit has priced MXP3.13bn-equivalent in UDI-denominated 2030 RMBS, its largest placement of this kind. A MXP1.346bn-equivalent tranche priced at 4.40% and a MXP1.782bn tranche priced at 4.78%. Both have a legal final of 2030, and a separate time tranching structure in which the smaller tranche has a weighted average life (WAL) of 2.56 years and the larger had a WAL of 7.7. The first tranche was 2.23x oversubscribed, according to a banker managing the sale, and the second was 1.92x oversubscribed. The AAA rated notes were mainly purchased by insurance companies, pension funds and brokerages. Deutsche Bank and Banamex managed the sale, with HSBC as co-lead. The placement is the first offering from a MXP15bn program.
Yearly Archives: 2008
Merrill Poaches Again from CS
Merrill Lynch has hired Adriano Borges from Credit Suisse, where he was head of the real estate investment banking business for Brazil, say people familiar with the matter. The move is a blow to the Swiss institution, which has led Brazil’s real estate equity business since 2004 with 33% of the total underwriting pool, according to Dealogic. CS led 11 out of the 27 deals priced in the region, fewer than the 14 led by UBS, but worth more in terms of total deal size, at $2.7bn. Borges, who moved to CS in 1999 as a technology banker, shifted to real estate coverage in 2004 just before the start of the IPO boom in that sector. He was behind Cyrela’s debut offering in 2005 and subsequent follow-ons. Borges also helped garner sole mandates for his shop on Agra, Inpar and Gafisa, as well as joint-lead roles on 6 others, according to Dealogic. Borges, expected to be a managing director at Merrill, is the second senior investment banking executive to leave CS for Merrill in a month. Sebastien Chatel, head of ECM who spent less than a year at the shop, departed in March to rejoin former UBS colleagues at Merrill as co-head of ECM. Merrill has been the most aggressive hirer in Brazil investment banking so far this year, bringing on eight new staffers from CS and UBS Pactual. The US shop is betting heavily on sustained strength in the Brazilian fee pool, which has been drained by a plunge in equity volume.
IMF Approves Cash for Honduras
The IMF has approved a 12-month precautionary stand-by arrangement for Honduras for approximately $63.5m to support its economic program for 2008. “The main objective of the authorities’ program is to entrench macroeconomic stability and sustain high growth by consolidating and reorienting the fiscal stance, containing inflation, reinforcing external stability, and addressing weaknesses in the energy sector,” says the Fund. Murilo Portugal, deputy IMF managing director, notes recent robust growth and declining poverty in Honduras. He adds that there is a need to strengthen the energy sector to support growth and safeguard public finances. Electricity tariffs have been increased, but the government’s program envisages the clearance of arrears with electricity suppliers, as well as the implementation of a new tariff structure that covers operational costs of the electricity company.
India and Venezuela Form Oil JV
PDVSA and state-controlled Indian oil company ONGC Videsh have establish a new joint venture for exploration and production in the San Cristobal block, Anurag Swarup, business manager of ONGC Videsh in Venezuela, tells LatinFinance. The Indian company will control 40% of the new company, Petrolera IndoVenezolana, through an investment of $500m. PDVSA will own the other 60%. The agreement was signed by Rafael Ramirez, president of PDVSA, and Murli Deora, India’s petroleum and natural gas minister. The San Cristobal block is located in the Orinoco oil basin.
Issuance Attractive, Says Brazil Treasury
While spreads over Treasuries have widened for Brazil, as they have for other EM sovereigns, the nominal cost of borrowing has actually come down since a year ago, says Paulo Valle, Brazil’s deputy treasury secretary and head of public credit. “A year ago, we issued 2017 bonds at a yield of 5.88%. Today, that bond could come around 5.70% or so,” the official tells LatinFinance, explaining the one of the ways his team has been analyzing the market. He also notes there is strong buyside demand for a Brazil bond. “Nominally, it’s an attractive rate. But since our goal is not only to raise money, we take into consideration other factors.” Valle says with the sovereign not needing new funds and unusually volatile market conditions, timing for a retap will be chosen very carefully. Total dollar issuance in 2008 will not top $2.8bn plus the amount of external debt repurchased in Brazil’s early redemption program throughout the year, according to a slide in the Ministry of Finance’s investor presentation at the IDB meetings in Miami.
LatAm PF Vet Joins Morgan Lewis
Law firm Morgan Lewis has added veteran Latin American project finance lawyer Dino Barajas to its New York and Los Angeles offices. Barajas was previously at rival Paul Hastings, and has represented on LatAm deals including the Xacbal hydroelectric project in Guatemala and the acquisition of EDF’s Mexican generation portfolio by Gas Natural.
MMX Approves Share Split
MMX Mineracao e Metalicos shareholders have approved a one-for-20 share split, it said. Shareholders registered as of April 7 are entitled to receive the shares resulting from such a split, which will be credited April 11. The miner controlled by billionaire Eike Batista will also correspondingly change the proportions in its global depository receipts, with each GDR representing one share instead of the previous 20.
Peru Sees Sol Bond Sale by Month End
Peru plans to hold another auction of sol-denominated bonds by the end of this month, Jose Miguel Ugarte, executive director of public credit, tells LatinFinance. A $900m-equivalent program kicked off March 27 with the placement of PES273m ($100m) in 2026 bonds at 6.96%. As announced earlier this year, Peru will repay $1.1bn in multilateral debt using a combination of its own treasury surplus and the issuance of sol-denominated bonds through regular sales. Ugarte says Peru is still deciding on the exact mix of its own funds and debt that will form the repayment. A dollar offering this year is unlikely, he explains, given the current state of the US market and Peru’s ability to manage its own financing. Other items on the finance ministry’s agenda this year include supporting reform that increases the amount that pension funds can invest in international assets and the creation of a “Lima-bor” floating interbank benchmark rate, the official says.
Posadas Prices MXP1.5bn Bonds
Mexico’s Grupo Posadas priced MXP1.5bn in 2013 floating-rate bonds at 180bp over the 28-day TIIE. The hotel operator had originally planned to also offer up to MXP1bn in 2018 notes, but cancelled the sale due to low demand, it said. Even after shifting all demand to the five-year tranche, the issue was only slightly oversubscribed, says a banker on the transaction, as it was the first time in Mexico a single A issuer had done five-year bonds. A single A credit was always going to be a difficult, says a banker away from the transaction, and 10-year credit was a long shot. Posadas plans to use proceeds to fund a buyback of dollar-denominated debt. As of March 31, it had received tender commitments from a majority of holders of its $225m outstanding 8.75% 2011 bonds, in an offer expiring April 11. Credit Suisse is dealer manager on the tender and also managing the debt sale. Ixe, JPMorgan, BBVA and ING were co-managers.
Venezuela Inflation May be Slowing: Fitch
The pace of inflation in Venezuela seems to be slowing thanks to a series of measures taken by the government, Erich Arispe, associate director at Fitch, tells LatinFinance. The view is somewhat contrarian given the bleak outlook other analysts have for the country’s prices. “The high inflation in Venezuela has a domestic component that the government is trying to adjust by reducing expenditure,” Arispe says. The government is also draining liquidity out of the domestic markets by moving deposits out of private banks into public banks and issuing dollar-denominated structured notes to local financial institutions, says the analyst. Still, Arispe expects inflation to rise in the second half of the year because of an increase political spending in the wake of the November legislative elections. Consumer prices in Venezuela rose 1.7% in March and 7.1% in Q1, according to Venezuela’s central bank. The government now expects 2008 inflation to end the year at 19.5%, well above an earlier forecast of 11%. The new projection dismayed some Wall Street analysts who wonder why the administration appears comfortable with such a high figure.