Peru followed through with plans to pay down $838m worth of Brady debt Friday. The sovereign eliminated its outstanding amounts FLIRBs, PDIs and Discount bonds, Jose Miguel Ugarte, head of public credit, tells LatinFinance. Peru used $685m worth of proceeds from peso-denominated sovereign issuances at the end of last year to pay down the notes at par. It also used $153m from the Treasury to pay the balance, says Ugarte. The process eliminates virtually all of Peru’s Brady debt. The country still has about $50m in Par bonds that are trading at 85, which it chose not to call. Having received news of the plans to pay down the debt earlier this year, markets didn’t react to the move Friday, says one Andean strategist. The strategist notes that in general, however, the move is a welcome development that is part of Peru’s overall positive story.
Yearly Archives: 2008
Banorte Prices MXP3.6bn in Bonds
Mexico’s Banorte priced Friday MXP3.6bn in 10- and 20-year bonds. A MXP3bn 2018 peso tranche priced at 60bp over 28-day TIIE, and a MXP630m 2028 UDI-denominated tranche priced at 4.95%. Proceeds are being used to bolster the issuer’s capital base, according to the regulatory filing. Banorte’s DCM desk ran the books for the deal.
Vene Utility Launches Debt Repurchase
Venezuela’s Electricidad de Caracas has offered to buy back any and all of its $260m in outstanding 10.25% 2014 bonds. In an offer expiring April 8, it will pay $1,051 per $1,000, plus and additional $20 per $1,000 for notes tendered before March 24. ABN AMRO is dealer manager.
EM Debt Underperforms
EM Bond funds dropped 0.61% in the week ended March 6, according to Lipper. That was far worse than the 1.10% rise of International Income funds, and the 0.25% pickup seen by Global Income funds. So far this year, EM Bond funds are up only 0.43%, compared to a 5.81% gain for International Income and a 2.73% increase for Global Income.
Mexico Readies Airport Auction
An auction for the concession of Mexico’s Maya Riviera airport will likely take place in the coming months, according to Federico Patiño, deputy general director at Mexico’s Nacional Financiera. “We will be in the market for Maya Riviera very soon,” Patiño told LatinFinance on the sidelines of a US-Mexico Chamber of Commerce event Friday in New York. Patiño and Oscar de Buen, deputy secretary for infrastructure, are on tour to sell Calderon’s five-year infrastructure plan. Patiño said the auction for Maya Riviera will be awarded to the bidder that offers passengers and airlines the lowest tariffs. Mexican airport executives LatinFinance spoke to earlier this year say the airport project could cost $200m. Separately, De Buen declined to elaborate on the plans for location and timing of a second Mexico City-area airport, saying only that the government is still studying the situation. That project would likely cost between $3bn and $6bn, say airport executives. The two airports are among some $68bn in projects being supported by the Fonadin infrastructure fund that should eventually reach $27bn, says Patiño. Other infrastructure projects on the way include the FARAC II toll road concession that could reach $2bn, and the $8bn Punta Colonet seaport in Baja California.
Scotiabank Targets $200m Syndication
Peru’s Scotiabank is looking to raise $200m through a 5-year amortizing loan. The deal through Citi includes a 2-year grace period with seven ensuing semi-annual installments. The margin is heard at 120bp over Libor, say bankers away from the deal. The deal was launched the same day Peru’s Interbank announced a $200m 3-year step up loan via Standard Chartered. That deal will offer Libor plus 80bp in year one, 85bp in year two and 95bp in year three. Earlier this year, Banco de Credito del Peru raised $410m in an upsized and repriced 3-year step up loan at 70bp, 75bp and 85bp over Libor.
Petersen Group Draws in Lenders for YPF Buy
Argentine private equity firm The Petersen Group is slowly but surely drawing participants into the $1.02bn syndicated loan it is raising to acquire 14.9% of YPF. The loan is being led by Credit Suisse, BNP, Goldman Sachs and Itau, and has garnered MLA participation from ABN AMRO and Natixis. At least two more banks, and some large institutional investors are expected to come into the group, says a banker close to the process. The 3-year average life loan was priced in December using a model that included three components: Libor, 3-year Argentine CDS and a 200bp spread. The cost of the loan was fixed at Libor plus 565bp, says the banker. In addition to the syndicated loan, the Petersen Group, also referred to by market participants as “the Lowlands Group,” received a seller’s note of equivalent size from Repsol. Petersen Group is run by Argentine banker Enrique Eskenazi and his sons. The family owns, among other assets, Banco de Santa Cruz. YPF is the Argentine subsidiary of Spain’s Repsol and the country’s biggest oil company.
Nexxus Capital Closes $142m Fund
Nexxus Capital, the Mexico-based private equity shop, has closed its Nexxus III fund with a total investment of $142m, according to Roberto Terrazas, director of Nexxus Capital. Main investors include IFC, CDC, HSBC, Export Development Canada and CMIC. The fund aims to invest in medium-size companies in Mexico, with sales of $50m-$500m, Terrazas tells LatinFinance. The investments made by Nexxus III will focus on companies that cater to the Mexican middle class in sectors like health, education, consumer goods, retail, tourism, finance and housing. The fund plans to make investments of $20m-$50m, Terrazas says.
ECM Bankers Mull PIPE Options for Brazil
As Brazil’s public equity market offers increasingly scant relief for cash hungry issuers, bankers and lawyers are considering ways to introduce PIPE (private investment in public equity) as an alternative to a traditional follow-on. In a PIPE transaction, a publicly listed company raises cash by placing shares privately with a small group of investors on privately arranged terms. The benefit for the issuer is access to capital markets without the risk associated with public exposure. Willing investors, on the other hand, get shares at a discount in exchange for low liquidity and some restrictions on selling. “It’s an ideal instrument for this type of environment,” says a Sao Paulo-based banker at a top equity house. A banker at a competing shop notes his group has spent a lot of time in dialogue with lawyers and the CVM to alter legislation to permit PIPEs. “Today, if you issue shares privately you have to offer shares at the same price to existing shareholders,” says the banker. That defeats the purpose of raising cash quickly and privately. While a surge of PIPEs is unlikely any time soon, the need is definitely there, say bankers. Brazilian issuers will continue to consider non-traditional capital raising techniques as market volatility hampers new issuance.
Moody’s Puts CESP Rating on Review
Moody’s has put CESP’s Ba3 corporate family rating on review after the recent announcement by the state of São Paulo that CESP will be fully privatized. The action is based in uncertainties surrounding the recently announced privatization process, including the creditworthiness of the new shareholders and the financial strategy to be adopted by the new management, the agency says. Approximately $965m of debt instruments are affected.