Two subsidiaries of Mexican builder ICA plan to issue up to MXP8.3bn ($692m) in asset backed bonds in the domestic market. The 21-year fixed-rate notes are guaranteed by future payments from contracts the Sarre and Papagos units have with Mexico’s secretary of public safety to build and operate prison facilities. The issue will be divided into MXP and inflation-linked, UDI-denominated portions. Pricing will take place in either August or September, according to bankers on the deal. Proceeds will be used to finance construction of the projects. HSBC, Bancomer and Santander are managing the sale, rated AAA on a national scale.
Yearly Archives: 2011
Posted inDaily Brief
ICBC Gains Foothold In Argentina
Industrial and Commercial Bank of China (ICBC) has agreed to acquire 80% of the shares of Standard Bank Argentina, Standard Investments, and Inversora Diagonal for $600m. The implied EV of $750 yields an implied EV/earnings multiple of around 18x, in-line with the 18x 2011 expected earnings Colombian conglomerate GrupoSura paid last month for ING’s LatAm insurance assets. Standard Bank will remain a 20% shareholder in Standard Bank Argentina following the transaction. Faizal Moolla, a Cape Town-based equity analyst with Avior Research, says the deal values the Argentine assets at 2.6x price-to-book. “Not a bad deal,” for Standard Bank, he says. Standard originally acquired its stake in the business for $120m in 2007, he adds, and will generate approximately $400m in proceeds from the transaction. “They made a good profit on this deal. We’re quite comfortable with what we see.” The asset is understood to have been widely shopped to Argentine buyers. The deal will also give ICBC first mover status among Chinese banks looking for a presence in Argentina, he adds. China is Argentina’s second largest trading partner. The asset is predominately composed of retail banking operations, though it also has corporate and investment banking operations. Both companies will capitalize the business with an additional $100m in equity. Standard Bank advised itself on the transaction, while JPMorgan provided a fairness opinion and Jones Day acted as legal advisors.
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LatAm Equities Return to Outflows
LatAm equity funds saw $390m in outflows for the week ending August 3, according to EPFR Global. EM equity funds, meanwhile, saw $1.2bn leave the asset class for the week as global equity markets crashed. Mexico equity funds lost $175m in their worst week since late December as investors penciled in reduced US demand for Mexico’s exports. Meanwhile, Brazil saw $80m in outflows. EM equity funds fell 7.2% for the week ending August 4, and are down 7.7% ytd, according to Lipper. LatAm funds also plunged 9.24% for the week, for a whopping 14.69% decline ytd. Global small and mid-cap funds also collapsed to the tune of 8.73% for the week, falling 6.33% ytd.
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Tecnisa to Try Local Funding
Real estate developer Tecnisa plans to sell up to BRL300m ($190m) in bonds in Brazil’s domestic market, choosing from among three possible tranches during the bookbuilding process. A 2015 tranche would pay the DI plus up to 1.85%, a 2016 tranche would pay DI plus up to 2.0%, and a 2017 inflation-linked portion would pay a fixed rate. Tecnisa is raising funds to improve its debt profile and provide working capital. An IR official says the company will not unveil the lead(s) on the deal until later this week. The paper is being sold under a 476 restricted format. Tecnisa is rated A minus on a national scale.
Posted inDaily Brief
Cemex Extends MXP Issue
Mexican cement company Cemex has extended pricing for an up to MXP2.5bn ($207m) in ABS bonds until later this month as it addresses regulatory requests. The cement company was expected to price Thursday. The bonds are rated AAA on a local scale. Ixe is the sole lead.
Posted inDaily Brief
Ecuador Gets Positive Outlook
In perhaps the only good news for the region Thursday, S&P raised the outlook on Ecuador’s B minus debt rating to positive from stable. “Higher levels of available deficit financing from China, combined with increased oil revenues, have allowed for greater public investment, which in turn have boosted Ecuador’s near-term growth prospects,” the agency says. It also notes relatively low external and fiscal debt burdens. An upgrade could come if the government successfully increases public investment and puts in place policies to boost private investment, including foreign direct investment. However, S&P reminds market participants that Ecuador’s recent history of default, as well as its economic policy inconsistencies, continue to constrain the rating. Ecuador defaulted on its 2012 and 2030 global bonds in 2008, resolving the matter in June 2009 through a special auction in which it repurchased the bonds at depressed levels. External market financing has been closed to Ecuador ever since the default, limiting the government’s financing options. President Rafael Correa made public remarks this week about hoping to access external markets before the end of 2012, according to wire reports.
Posted inDaily Brief
Emdersa Names CEO
Emdersa has selected Jaime Barba as its CEO. The top job at the Argentine power distributor had been vacant since Jose Luis D’Odorico left in May. Barba has held various positions at Emdersa parent Edenor.
Posted inDaily Brief
EPM Upsizes Debut Loan
Colombian quasi-sovereign utility Empresas Publicas de Medellin (EPM) has upsized an IFC-supported A/B loan to $349m after receiving commitment letters from 14 commercial banks, the company’s CFO Oscar Herrera tells LatinFinance. The A loan remains with a $25m size, but the B portion has increased to $324m from $250m. The deal marks EPM’s first foray into the syndicated loan market as it looks to diversify its funding sources. The B loan pays Libor+187.5bp on a 5-year tranche and +215bp on a 7-year, both with 75bp commitment fees. For MLA tickets of $50m, participants receive upfront fees of 100bp on the 5-year and 130bp on the 7-year, 80bp and 105bp respectively for $25m tickets, 65bp and 85bp for $15m and 50bp and 65bp for $5m. The loan is rated Aa3 by Moody’s and BBB minus by Fitch. Proceeds will go towards investments in energy and water distribution.
Posted inDaily Brief
Imcopa Clinches Reorganization
Courts have approved the reorganization plan of Brazilian soybean grower Imcopa. Earlier this year, Imcopa sought consent from holders of its $100m 10.375% 2009. It offered $25.94 in cash per $1,000 principal amount of notes, which it says is equivalent to half the interest that would have accrued from last November through May 10. Imcopa had been negotiating a broad restructuring plan with bank creditors since early 2009.
Posted inDaily Brief
Pemex Amendment Nears Completion
Pemex has seen some banks fall by the wayside as it looks to amend a dual-tranche loan with tighter financing terms, but the transaction is on track to achieving its $3.25bn size, say bankers. Inbursa, the financial institution controlled by Mexican billionaire Carlos Slim, is heard to be one of the banks that have declined to participate. “They are price sensitive so for them it didn’t work and they declined,” says one banker. Banks that bought the loan in the secondary market were also expected to turn down the Mexican state-owned oil company’s offer. “The original price didn’t make sense, so that is why they bought it in the secondary,” the banker explains. That said, the amendment is expected to get final approval sometime this month, and the company is heard asking banks to roll over interest payments on a weekly basis until the new pricing has become effective. Pemex launched the refinancing of its $3.25bn dual-tranche loan in July, with the aim of reducing margins by another 50bp. It closed the original transaction in December, but had a change of heart after seeing telecom America Movil lock in just 50bp over Libor on a $2bn 3.5-year loan in April. After paying Libor+125bp on its $1.25bn 3-year revolver and plus 150bp on a $2bn 5-year term loan, Pemex was heard to be less than satisfied with the spreads it had achieved just four months earlier. The company intends to reduce the margin on the revolver to Libor+75bp, while also cutting the term loan to Libor+100bp. Commitments fees will also fall to 25bp from 45bp. Banks will be paid a 25bp amendment for rolling over existing debt, and 35bp for any new money. Commitments were due August 3 with the closing previously scheduled for August 5. Participants on the original deal were Deutsche, Goldman Sachs, Intesa Sanpaolo, Credit Suisse, Societe Generale, Bayern LB, JP Morgan, SMBC, Bank of Tokyo-Mitsubishi, Mizuho, Morgan Stanley, Banco Santander, Natixis, EDC, DZ Bank, Bank of New York and Scotia. Sumitomo came