LatAm equity funds booked inflows of $48m in the week ended December 7, according to EPFR. This helped offset losses in other regions which contributed to $159m of outflows for EM equity funds during that period. In terms of performance, EM equity, fell 2.37% during the week ending December 8, and is down 18.45% on the year, according to Lipper. Similarly, LatAm funds lost 1.49% on the week, and have dipped 20.06% ytd. Global small and mid-cap funds were up 1.79% on the week, but are down 12.70% ytd.
Yearly Archives: 2011
Posted inDaily Brief
Sabesp Plans Local Debt Issue
Sao Paulo water utility Sabesp plans to raise funds in the local bond market. A BRL850m ($470m) debenture has been approved to repay debt maturing in 2012. It does not yet indicate the tenor of the transaction, to be done under the rule 476 restricted format. BTG and Esprito Santo are managing.
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Batista Adds to Sport Entertainment JV
Brazil’s EBX and global sports and media company IMG Worldwide have purchased sports agency Brasil 1 Sports and Entertainment for their recently created entertainment joint venture IMX. The holdco for Brazilian billionaire Eike Batista’s group of companies, signed a 50-50 joint venture with IMG in November with the aim of turning it into the leading sports, entertainment and arena company in the country. The IMX venture’s portfolio of projects includes the Volvo Ocean Race, the LPGA Brazil Cup, the Travessia dos Fortes open water marathon and the Ultimate Fighting Championship. A spokesman for EBX could offer no valuation details of the transaction and said the total amount paid for Brasil 1 will remain confidential. He could not immediately say if the partners used any financial advisors.
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City of Lima Sounds US Accounts
The City of Lima has been sounding out the US buyside about an international bond, says one investor who has talked to municipal officials about such a possibility. Citigroup has been coordinating some discussions, according to this investor, but other banks are also heard talking to the borrower. The municipality is thought to be considering a debut $500m in sol-denominated bonds. Fitch rates the City of Lima’s foreign and local currency long-term debt at BBB minus.
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Hopes Run High for Local Chilean Bond Surge
More international borrowers, as well as Chilean names with a foreign presence, are set to tap the country’s bond markets in 2012, a year that could see a surge in new issuance volumes if access to loan funding shrinks. The recent UF2m ($87m) 5-year bond sale from the Chilean unit of Dutch financial institution Rabobank is just one sign that foreigners are once again looking at the country’s domestic market, says Gonzalo Ferrer, managing director of DCM and financial structuring at Celfin Capital, a bookrunner on the trade. “[Rabobank] is a little different, not less interesting,” as it was a local entity of an international bank selling bonds in the domestic market, Ferrer says. Celfin has been touring several LatAm countries in an effort to encourage borrowers to take advantage of opportunities in Chile. However, so far the response to so-call “huaso” bonds – the name given to local bonds issued by foreign borrowers – has been lukewarm at best, even after regulators earlier this year changed rules to broaden the appeal of this sector to mid-tier names. Only two borrowers have tapped this market. Mexican telecom America Movil has completed two such trades to date, while Peruvian bank BCP added a third. A UF2.5m issue from supranational bank Bladex has not materialized. Indeed, 2011 failed to generate even one “huaso” bond, though Chile has increasingly become an essential stopover for regional borrowers seeking to sell both USD and BRL paper. Peruvian Reg-S only trades, such as Interproperties Finance Trust’s recent $185m 2023, have also seen considerable demand from Chile’s buyside. Expectations of high issuance volumes this year slowly faded after the European debt crisis, as well as domestic problems such La Polar’s default this summer, dampened enthusiasm for bond sales. Next year and late 2011 could be different, however, especially if an international credit contraction occurs, forcing would-be loan borrowers to the local bond market. At the moment Celfin has
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Mexico’s Alsea Grabs Italian Chain
Mexican food and beverage franchise operator Alsea has purchased Italcafe, the parent company of Mexico’s Italianni’s restaurant franchise, in a transaction valued at MXP2.05bn ($149.5m). The deal includes the purchase 8 Italianni units as well as an 89.8% stake in Grupo Amigos de San Miguel, which controls 34 of Italianni’s restaurants across the country. The purchase also includes the fee use of the Italianni’s brand name for up to 30 years, free of franchise royalties. An Alsea spokesman declined to offer any more details on the transaction or reveal advisors until Alsea holds a press conference, scheduled for Monday. The Alsea document does point out, however, that the companies agreed to an enterprise value-to-Ebitda multiple valuation of 8.5x, assuming an Ebitda of the last 6 months up until June 2011 of MXP241.5m ($17.6m). Notably, the deal includes a clause that allows Italcafe to cancel the sale if a due diligence review now underway determines an Ebitda of less than MXP218m ($15.9m). At that level, the 8.5x multiple agreed by the parties would yield a $135.15m price tag for the Italcafe franchise. Alsea said it plans to finance the deal with the help of 4 loans obtained from HSBC, Banamex, Santander and BBVA Bancomer, at tenors of 5 years each. Alsea is known as the operator for brands such as Starbucks, Dominos Pizza and Burger King in Mexico. Company officials have expressed an interest in expanding locally and in other parts of South America.
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OSX Preps $3bn in Project Financing
Brazil’s OSX is preparing some $3bn-plus in financing for 5 FPSO and wellhead platform projects, says Roberto Monteiro, the company’s CFO. The borrower has typically resorted to the loan market, but could look to local development bank BNDES, as well as to bridge or bond financing. Last year, it raised $420m through an 8.5-year loan in October 2010 at Libor+425bp to finance the OSX-1 FPSO. It also just recently closed an $850m 12-year loan which was used to finance the construction of OSX-2 and came at Libor+425bp pre-construction and at 450bp thereafter. “The third FPSO will be financed mid-2012 and we still haven’t defined if it is going to be a syndicated loan or a bridge and then a project bond,” says Monteiro. Meanwhile the wellhead platforms will likely be financed by development banks BNDES and ECA GIEK. “Since they are being built in Brazil, BNDES is interested in financing to promote local content,” he adds. It could be a similar story for OSX 4 and 5, as they will likely be the first FPSOs to be built in OSX’s own yards.
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Banco de Bogota Bond Gets BBB Minus Rating
Fitch and S&P have each assigned a BBB minus rating with stable outlook to Banco de Bogota’s proposed USD senior unsecured notes. Colombia’s second largest lender is looking to raise a total of $1bn to in the bond and loan markets to pay back a 1-year $1.2bn bridge loan used for acquisition financing. The borrower was due to wrap up meetings with bond investors in New York and Los Angeles Thursday with Citi, HSBC and JPMorgan. Banco de Bogota is heard considering a $500m bond with a possible 10-year tenor, according to an investor who met with the name, but nothing had been announced as of late Thursday. Banco de Bogota is in the process of syndicating a $500m 3-year loan at Libor+225bp.
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Brazil Foods Asset Swap Seen as Positive for Marfrig
Brazilian food companies Brazil Foods (BRF) and Marfrig have agreed to an asset swap that would satisfy BRF’s regulator-mandated asset divestments and add Argentine assets to its portfolio, a trade that offers an Ebitda boost to Marfrig. As part of the deal, Marfrig would pay BRL200m ($110m) to BRF and hand over the assets and brands for Argentina’s Paty hamburger, the Barny and Estancia del Sur brands, as well as a number of barns and farmland in Mato Grosso. Marfrig in turn would get a series of assets, including brands such as Wilson, Texas, Tekitos, Patitas, Light Elegante and Doriana margarine, 10 food processing plants and 12 chicken barns, eight distribution centers and 64.57% in Excelcior Alimentos. Officials at Marfrig declined to provide more information on the transaction, or to disclose if any advisors were used. BRF officials could not immediately be reached for comment. As announced, the deal was seen as a good move for Marfrig. “At first glance, the deal seems slightly more favorable to Marfrig,” said Barclays Capital in a research note. Barclays reckons Marfrig is adding an additional 13% to its Ebitda, while BRF is adding 3% to its Ebitda numbers. For BRF, the deal will mean surrendering roughly $100m in Ebitda in exchange for $120m in cash and $50m in Ebitda as well as a pork plant in Brazil, leaving its net leverage at 1.25x, according to Barclays estimates. Marfrig is left with a leverage of 5.5x net debt to Ebitda, the bank estimates. Since the creation of BRF through the merger of Sadia and Perdigao in 2009, Brazilian anti-trust regulators have pressed the company to divest some assets, including brands Batavo and Doriana.
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Brazil’s Vanguarda Unloads Biodiesel
Vanguarda Agro agreed to sell two Biodiesel plants to biodiesel producer Oleoplan for BRL100m ($54.8m), in a deal that allows the company to reduce its debt load. The Brazilian agribusiness company will sell its biodiesel plants in Iraquara in the state of Bahia and in Porto Nacional in the state of Toncantins. Officials for both companies could not be immediately reached for further details of the transaction. The divestment will allow Vanguarda to cut its net debt by 29% as estimated by the company on October 31. The transaction is part of Vangiarda’s bid to revamp its capital structure and rid itself of assets it no longer considers pertinent to its core business.