A sale of Shell’s downstream Argentine assets could fetch more than $1bn and would be in line with the company’s regional strategy, market sources say. The Quineco unit of Chile’s Luksic group is rumored to be close to signing a deal to buy Shell’s 700 service stations, Dock Sud refinery and the Barracas lubricant plant, in what would be a follow-up to its purchase agreed in May to buy Shell’s Chilean downstream assets for $614m. Shell has been wanting to exit Argentina for some time, but had found it difficult under former president Nestor Kirchner’s administration, who opposed any sale to a foreign buyer, says a banker, noting the value of the deal should be more than $1bn. Such government opposition may have weakened since Kirchner’s death, paving the way for Luksic. A government go-ahead is said to be part of the negotiations happening this week, according to local press. “Shell is streamlining its portfolio of assets in the region,” says an oil sector analyst, who notes Shell’s business in Argentina represents about 15% market share. A Shell Argentina official declined to comment, and a Quineco official did not return a request for comment.
Yearly Archives: 2011
Brazil to Create Blue-Chip Credit Reference
Brazil’s central bank plans to start publishing in September a new benchmark interest rate to be granted to low-risk clients, according to remarks made to the press by the central bank head Alexandre Tombini. The move is aimed at increasing transparency and conditions for competiveness in the banking sector. The new indicator will be published first as part of the central bank’s financial stability report in mid-September and would be similar to that of the prime rate used in other countries. The central bank currently publishes average interest rates charged by banks but does not distinguish them by credit risk.
Casa Saba Refinances Loan
Mexico’s Grupo Casa Saba has refinanced a MXP7.72bn ($628m) bridge loan, rolling it over into a two tranche term loan, it says. The pharmaceuticals distributor took out the loan last year to fund the $498m purchase of a controlling stake in Chilean drug store Farmacias Ahumada. A 7-year portion of the transaction pays TIIE+481bp, and a shorter tranche, for which it does not specify the tenor, pays TIIE+225bp. Banorte and HSBC managed.
Cofide Selects Banks on External Bond
Peru’s Cofide has mandated Deutsche Bank and JPMorgan to issue up to $500m in 10-year bonds. The development bank plans to sell the paper in the latter part of the year, but may issue earlier depending on how the Humala administration’s economic policies evolve. This would be the borrower’s debut offering in the international capital markets. Plans for a foreign debt issue have been on the table since last year when the borrower was expected to raise $200m-$300m through a 10-year to lend for infrastructure projects. Other funding options under consideration were local debt issues and a foray into the Japanese market. In 2010, Cofide closed an amendment and restatement of a $160m 3-year loan coming with pricing at 125bp over Libor, but with a smaller size than the $185m it had originally sought after European banks were constrained by rising funding costs.
EM Bond Funds See Outflows
EM bond funds reversed gains from last week and shed $607m for the week ending August 10, according to fund data company EPFR Global. The funds’ performance showed a loss of 2.6% for the week ending August 11, according to Lipper, but is still up 3.9% ytd. Meanwhile, global-income funds inched 0.6%% lower for the week, to yield 4.5% growth ytd. International income funds also slipped 0.8%, bringing the ytd return to 6.65%.
Fitch Lowers Cemex’s Outlook
Fitch has affirmed the B rating for Mexican cement company Cemex, while revising its outlook lower to stable from positive. The agency cited the anemic prospects for the US construction sector as a reason for its revised view on the credit. “A vibrant US construction market is crucial to the recovery of Cemex’s credit profile,” it says. During the last 12 months, Cemex’s Ebitda fell to $2.26bn from the $2.321bn and $2.678bn seen in 2010 and 2009, respectively .As of June 30, total debt stood at $18.426bn against $675m in cash and marketable securities. More positively, Cemex has been aggressively reducing debt repayment risk and has taken steps to improve cash flow, it adds. Fitch sees net debt levels of $18bn by the end of the year, up from $17.75bn as of June 30, 2011. It notes that the company may need to make payments into collateral accounts for equity linked derivatives due to the sharp decline in the company’s stock price. Cemex is also likely to exceed leverage covenants on its financing agreement (FA) with banks, though it is expected to successfully renegotiate such limits. As of June 30, Cemex had a leverage ratio of 7.16x and a coverage ratio of 1.87x, it adds. Positive rating action could be generated by a rescheduling of the FA debt due in 2013 and 2014, substantial asset sales, or a recovery of demand for cement in the US.
Gran Colombia Prints Silver-Linked Notes
Gold producer Gran Colombia Gold has placed $80m of 7-year silver-linked notes at par with a 5.0% interest rate. Investors will receive on a pro-rata basis either the $1,000 principal amount per note or the US dollar equivalent to about 66.7 ounces of silver per note, whichever is greater. The company says it is hedged against silver prices as it produces the metal as a by-product at its gold mining operations and it also has developed significant silver resources at its Marmato project in Colombia. Proceeds will be used to develop the Marmato project as well as fund social programs and the relocation of the town of the same name. The deal was led by GMP Securities with RBC Dominion Securities, Fraser Mackenzie, Raymond James and TD Securities also participating. Gran Colombia is a Canada-based gold and silver mining company with operations in Colombia.
Investors Continue to Bolt from EM Equities
LatAm equity funds saw $692m in net outflows for the week ending August 10, according to fund data firm EPFR Global, as investors continued to flee risk assets against a backdrop of losses in markets around the globe. EM equity funds, meanwhile, saw $7.7bn leave the asset class for the week. Mexico equity funds lost $95m, and Brazil saw $109m in outflows. EM equity funds fell 5.1% for the week ending August 11, and are down 12.4% ytd, according to Lipper. LatAm funds also plunged 2.2% for the week, for a 16.9% decline ytd.
Lindley Heard Mandating for Foreign Foray
Peru’s Corporacion Lindley, a non-alcoholic beverages company, is preparing an international bond with Citi and JPMorgan, bankers say. The Lima-based company produces bottles, and distributes Inca Kola among other carbonated and non-carbonated drinks such as fruit juices, isotonic beverages, energy drinks and mineral water. Lindley has strategic alliances with The Coca-Cola Company. This would be the issuer’s debut bond offering abroad.
MMX Retains Advisors for Jumbo Loan
MMX, the mining unit of Brazilian magnate Eike Batista’s business empire, will seek to raise $1.8bn in the loan market later this year to fund the expansion of its Serra Azul project. The company has retained Itau and WestLB as debt advisors with preliminary discussion about the transaction already under way. The structure is expected to take the form of a commercial tranche alongside financing from export credit agencies (ECAs). MMX shareholders China’s Wisco and Korea’s SK Networks should be able to leverage relationships with Asian agencies, says a person familiar with the process. Such stakeholders have already put up some equity to cover the cost of the $2.3bn project, he adds. A 10-year maturity seems reasonable as “mining and iron ore is a high margin business these days and it does not require longer tenors,” he adds.