SUEZ Energy International has signed a BRL1.049bn project financing contract with BNDES to support construction of a 1,087MW hydroelectric plant in Estreito, Brazil. The package includes two equal 24-year loans from the Brazilian multilateral lender, with the second provided through a group comprised of Unibanco, Bradesco, Itau and Banco Votorantim. The first BRL524m loan directly from BNDES is priced at 1.89%. The second, in which BNDES lends 524m to the four banks who in turn lend to SUEZ, is priced at 2.95%. SUEZ and its consortium partners Vale, Alcoa and Camargo Correa, expect to spend a total of about $1.8bn on the Estreito project. The plant is located on the Tocantins River between the states of Tocantins and Maranhão, downstream from SUEZ’s 243MW São Salvador and 450MW Cana Brava hydroelectric plants.
Yearly Archives: 2008
Electricidad de Caracas Sells $650m Bonds
Venezuelan state-controlled utility Electricidad de Caracas (EDC) has sold $650m in 2018 bonds in a private sale, according to an investor in Caracas who looked at the transaction. The notes carry an 8.5% coupon, and were sold to a handful of banks and brokerages. Buyers of the EDC bonds will pay in local currency and receive dollar-denominated notes, a concept which the government utilizes to attempt to keep the parallel dollar market in check. It was unclear if EDC planned to use proceeds to fund the repurchase of $244m-$260m in 10.25% of 2014 bonds, in an offer expiring April 8.
Vene Announces Bond Aimed at Importers
Venezuelan finance minister Rafael Isea says the sovereign is planning to issue a bond series this month to be sold exclusively to local importers of food, medicine, medical equipment and machinery. It will be placed in the local market in US dollars but paid in VEB at the official rate, according to the Venezuelan state news agency. It is aimed at expediting importers’ access to hard currency, currently under tight regulation by the Venezuelan government. Isea also announced that the currency restrictions will continue unchanged, with the rate buoyed at VEB2.15/USD, despite rumors of a possible dual exchange scheme.
Gerdau Subsidiary Buys Century Steel
Gerdau Ameristeel, the American subsidiary of Brazilian steel group Gerdau, announced the purchase by Pacific Coast Steel (PCS), a majority-owned Gerdau Ameristeel joint venture, of Century Steel (CSI), a Las Vegas-based reinforcing and structural steel contractor for approximately $152m. The operation was completed with no advisors and financed with cash-on-hand, Gerdau Ameristeel CFO Barbara Smith tells LatinFinance. With fabrication facilities that have an annual capacity in excess of 250,000 tons per year, CSI participates in the marketplace in the western US. At the same time, Gerdau Ameristeel announced that it will pay approximately $68m to increase its equity participation in the PCS joint venture to approximately 84%.
Arcelor Brasil Sets Final Delisting Price
ArcelorMittal has finalized the price of its delisting offer for all shares of its Arcelor Mittal Inox Brasil unit at BRL95.25 per common share and BRL94.70 per preferred share. This corresponds to the price of BRL100 for each common and preferred share, after the subtraction of interest on equity and interim dividends. The deal is to be settled through a Bovespa auction April 4 and will result in ArcelorMittal acquiring the 43% outstanding shares in the company it does not already own.
EM I-Bank Revenue Seen Resilient
Revenue from investment banking in the emerging markets will contract by an average of 5% to $15bn, much less than the global contraction in the industry, according to a report from Morgan Stanley and Oliver Wyman. The research suggests that in an optimistic scenario, revenues could actually increase in 2008, by as much as 10%. The report does not break out the regions, but according to one of the authors, the average should be proportional across the board, implying up to 10% expansion in LatAm this year. “The industry is facing the most severe investment banking crisis in 30 years,” the report states, referring to the global outlook. Underlying investment banking revenue is expected to contract by roughly 20% in 2008 before a further $75bn+ of write downs. “While cautious near term, we are optimistic further out as the cycle turns and we see numerous opportunities for rebound and growth, including the return of credit distribution, albeit in a very different form,” says the report.
Moody’s Mulls Ipiranga Upgrade
Moody’s has put on review for possible upgrade the Ba3 rating on Ipiranga’s senior unsecured step-up notes due August 2008. The agency puts the value of the debt securities affected at approximately $54m. Ipiranga will benefit from the ownership of Ultrapar Participacoes, an investment holding company specialized in oil, gas and chemicals, to improve its operating margins through more efficient cost control and synergies, says the agency. “In addition, we believe that the credit strength of Ultrapar will have a positive impact on [Ipiranga’s] financial management, with potential reduction in funding costs, as demonstrated by the recent redemption of [Ipiranga’s] local market debentures,” Moody’s says. The review process will focus on the potential for operational improvements at Ipiranga, as well as the level of support expected from Ultrapar.
IDB Approves Loan to Uruguay
The IDB has approved a $5.4m loan to Uruguay for a foreign trade management program to foster international economic integration. The 25-year term loan has a 54-month grace period, at a variable interest rate and will receive $500,000 in local counterpart financing.
Correction:
In an April 2 brief, Brazil’s Perdigao Acquires Cotoches, the focus of the company was incorrectly stated. Perdigao is primarily a poultry producer.
Real Money Awaits Next Peru Promotion
It may take a while before investment grade-only investors start piling into Peruvian assets en masse, since most need another endorsement. “Many investors will still need an upgrade from a second ratings agency in order to invest in Peru,” says the head of strategy at a leading US-based shop, adding that the ability to allocate depends on each fund’s covenants. S&P has Peru at BB+, one notch below investment grade, while Moody’s rates it Ba2, two notches below. Fitch yesterday upgraded Peru to BBB minus. S&P is likely to raise Peru in the next 12 months, says Goldman, which notes “the upgrade to investment grade is likely to attract additional investment inflows into Peru in terms of both FDI and portfolio inflows, increasing the already strong pressures for the PES to appreciate.” One tangible benefit for Peru should be increased stability as it lures a higher class investor. “From a risk-reward point of view, it will become a less volatile country because of the nature of the investors that will be entering [the bonds,]” says the head of strategy at the Wall Street firm.