Brazilian steel company Cosipa has received consents from holders of $140.747m of existing 8.25% 2016s, allowing it to amend the indenture governing the notes. The idea is to establish the same covenant package contained in the 7.25% 2018s issued by Usiminas, which merged with Cosipa in April 2009. The 2018s have less restrictive covenants thanks to Usiminas’ investment grade rating. Holders who validly delivered consents before the expiration date of July 27 will receive $2.50 for each $1,000 in principal. Itau BBA is acting as dealer manager.
Yearly Archives: 2011
Posted inDaily Brief
ICBC to Take Stake in Standard Bank Argentina
Standard Bank is near to closing on the sale of a 25% stake in its Argentinean operations, according to a banker away from the deal. “It’s a nice size asset for pretty much anyone,” the New York-based banker says, adding that most of the major players in the region had taken a look at the asset prior to it entering one-on-one negotiations with China’s Industrial and Commercial Bank of China (ICBC). “It was a hot asset, frankly,” he says. Santander, Galicia, and Macro all have roughly equivalent market shares, and had considered acquiring Standard as a way to separate themselves from the pack. “It’s a strong franchise. Poorly managed, but a good franchise nevertheless,” the banker adds. ICBC has held a 20% stake in parent Standard Bank since 2008. The deal is expected to be valued at $700m-$800m, which would imply an enterprise valuation of around 16.8-19.2x 2010 earnings, broadly in-line with the 18x 2011 expected earnings Colombian conglomerate GrupoSura paid last week for ING’s LatAm insurance assets. The banker describes the value as “realistic” after several players had already made offers that did not overvalue the assets. Standard is not using an advisor on the deal.
Posted inDaily Brief
Minerva Unveils Warrant Repurchase
Following the raising of BRL190m in convertible debentures last week, Minerva has moved on to the planned repurchase of BRL153m ($98m) notional value in stock warrants, setting an August 31 date for the operation. The Brazilian meatpacker will offer holders BRL0.65 each for the 29.2m warrants still outstanding, spending as much as BRL19m. The warrants were issued in 2009, as part of a $159m stock offering, and give holders the right to buy shares at BRL5.24 before they expire in September. Minerva says it is extending the offer to avoid holders experiencing an “excessive dilution.” Link Investimentos is managing the process.
Posted inDaily Brief
EM Bond Inflows Keep Coming
EM bond funds took in $924m for the week ending July 27, according to EPFR Global. According to Lipper, EM debt funds rose by 0.52% for the week ending July 28, and are up 6.34% ytd. Meanwhile, global income funds climbed 0.45% for the week, to reach 4.90% growth ytd. International income funds inched 0.62% higher, bringing the ytd return to 6.31%.
Posted inDaily Brief
Fitch Raises Salvador Outlook
Fitch has raised its outlook on El Salvador to stable from negative, and affirmed its BB rating. The revision reflects the government’s progress on fiscal consolidation, the expected stabilization of its public debt burden, and its commitment to comply with the precautionary IMF Stand-by Agreement (SBA). The country recorded a deficit of 4.2% of GDP in 2010, significantly lower than the 5.6% 2009 deficit and below the 4.8% benchmark set under the IMF’s SBA.
Posted inDaily Brief
Helm Sets Local Bond Issue
Colombia’s Helm Bank has set an August 8 date for the sale of a COP200bn-COP300bn ($113m-$170m) domestic bond, according to local DCM bankers. The bank will choose from 6 available tranches based on the demand it sees. A 3-year note paying a spread to the interbank rate IBR, 5 and 7-year pieces paying a spread to the IPC, as well as fixed-rate tranches of 3, 5 and 7 years are all available. Generally, 2-3 tranches are the norm in Colombian local deals of this size. Helm is managing the sale itself, and is rated AA+ on a national scale. Issuance has been picking up recently in Colombia, if only for financial issuers. “A lot of liquidity has entered the market in the last 2-3 months,” says an analyst at a local shop, coming mostly from large coupon payments that the government has made on its local debt. Other financial issuers are looking to follow this month, including Banco Falabella (COP150bn) and Banco Finandina (COP60bn), Banco de Bogota and Banco Davivienda. Bancolombia sold COP800bn ($450m) in 5 series of new domestic bonds last week.
Posted inDaily Brief
La Polar Seeks Agreement to Avoid Bankruptcy
Chile’s La Polar plans to seek creditor approval of a judicial agreement to rework its debt and avoid bankruptcy, it says. The Chilean retailer needs the agreement to proceed with a planned CLP100bn capital increase after it set aside loan-loss provisions topping CLP500bn ($1.01bn) last month for consumer-lending losses and fired senior managers when irregularities were found at its consumer lending unit. La Polar’s board has agreed to file a preventative judicial agreement that requires support from creditors representing more than half the outstanding debt to be processed. Bondholders agreed June 20 on a waiver of covenants that allows the company to suspend pre-payments while stockholders approved on June 22 the sale of $200m in new shares.
Posted inDaily Brief
LatAm Equities Fall
LatAm equity funds saw $98m in inflows for the week ending July 27, according to EPFR Global. EM equity funds, meanwhile, had $275m in inflows for the week. EM funds fell 0.36% for the week ending July 28, and are down 0.37% ytd, according to Lipper. LatAm funds also slipped 2.26% for the week, and remain negative 6.31% ytd. Global small and mid-cap funds also dipped 2.32% for the week, but remain up 2.41% ytd.
Posted inDaily Brief
Politec Shareholders Get Different Multiples
Minority shareholders in Brazilian IT company Politec will receive a lower multiple than majority holders in exchange for selling their shares to Spanish tech company Indra. Politec, which had BRL400m ($256m) in revenues in 2010, has agreed to sell itself for BRL224m. Minority shareholders, who hold 6.57% of the company, will be bought out for BRL4.5m, implying an EV-to-sales multiple of 0.6x, to be paid at the closing of the deal. Majority shareholders, including the founders and Mitsubishi Corporation with an 8.77% stake, expect to receive a combined BRL219.5m in 2014, contingent upon the company reaching BRL1bn in revenues in 2013 (implying a CAGR of 22%) with a 9% EBIT margin, implying a 0.9x sales multiple. The buyout value for the majority shareholders is variable depending on variations in sales, EBIT margin and net debt load. Indra says it will also capitalize the acquisition with BRL100m.
Posted inDaily Brief
Safra to Test Global BRL Market
Banco Safra is looking to return to the BRL Global market for a second time in just over a month amid talk that the recent imposition of an IOF tax on derivatives may encourage investors to further migrate to the offshore curve and help spur more issuance of this type. This deal is coming directly from the Brazilian bank as opposed to Europe-based issuer that tapped the market in June with a BRL400m Reg S only 10% 2015 (BBB minus) that was priced at 99.627 to yield 10.125% via BAML and Safra, according to bankers. Banco Safra SA, rated Baa2 and BBB minus by Moody’s and Fitch, is splitting into two teams to market the 144A/RegS Global BRL trade amid expectations of a 5-year tenor. Today the borrower will be in London and Chile, where pension funds have shown interest in such bonds, and it will wrap roadshows on Tuesday in Los Angeles and New York. This comes after much talk that several Brazilian issuers are looking to replicate the success of McDonald’s franchise Arcos Dorados’ BRL400m 5-year global (Ba2/BBB minus) bond earlier this year. Brazilian banks such as Bradesco, Banco do Brasil and BNDES are all heard contemplating such structures as well as other corporates such as steelmaker Usiminas and perhaps utility Cemig, which recently completed non-deal roadshows with Deutsche Bank. Being a utility with revenues in BRL tied to inflation, Cemig is thought to be an ideal candidate for an inflation-linked BRL bond, much like Banco Votorantim did earlier this year. Yet despite bankers’ effort to pitch inflation-linkers, it is questionable whether this structure will truly take off this year. Still with both the euro and the USD under pressure, bankers think that investors are more willing to take on the currency risk embedded in plain vanilla Global BRL trades, though the Brazilian government’s efforts to contain the strength of the BRL could counterbalance this trend however briefly. More likely, however, the authorities’ attempts to control the upward trajectory of