Chile’s Sociedad de Inversiones y Servicios de la Construccion has raised UF2.5m ($119m) from the sale of two local bonds. The investment vehicle of construction trade association Camara Chilena de la Construccion chose to place two of three possible tranches in a deal that saw 2.3x demand. A CLP21.8bn ($48m) 2016 peso-denominated tranche priced at 100.01 with a 6.80% coupon to yield 6.79%. A UF1.5m UF-denominated 2032 tranche with a 10-year grace period priced at 96.96 with a 3.6% coupon to yield 3.86%. Both tranches came at the same spread of 74bp to government bonds, according to a banker on the sale. A 5-year UF tranche included in the original registration was not used. Celfin and IM Trust managed the sale, rated AA/AA+ on a national scale. Inversiones la Construccion holds stakes in the AFP Habitat pension fund, insurance companies Camara and Isapre Consalud, while also having holdings in clinic operator Red Salud and other companies.
Yearly Archives: 2011
Colombia Expected to Hike Rate Today
Colombia’s central bank is expected to hike its rate by 25bp to 4.50% today, although Goldman Sachs says there is a moderate probability of a pause in the normalization cycle. The monetary policy committee was divided on its decision to hike the rate a month ago. Goldman cites currency appreciation and tolerable inflation dynamics as reasons behind a potential pause. Deutsche Bank says it expects the bank to keep the rate at 4.25%.
Elektra Crosses Finish Line
Mexican retailer Elektra put to bed its first international bond in over 10 years after printing a new $400m 7-year NC4 Thursday at 98.656 with a 7.25% coupon to yield 7.50%, in line with guidance and earlier investor expectations of a 7%-8% finish. Some accounts certainly wavered over a credit controlled by controversial Mexican magnate Ricardo Salinas, and the book size was heard to be modest, with some accounts hearing $500m plus on Thursday morning, but demand was sufficient to upsize the trade from an initial target of $350m and stick to 7.50% area guidance. Indeed, some 185 accounts were thought to have participated. “That’s not a bad tally – but I would wager a larger portion of fast money involved than you’d usually expect,” says a trader. .On the break, the bond slipped a touch to 98.50 bid, but like recently issued bonds from sister company TV Azteca, Elektra was expected to eventually perform relatively well after a less than perfect start. Interest payments fall on February 6 and August 6, starting next year. The bond carries a make-whole call of T+50 prior to August 6 2015 and is callable thereafter on August 6 at 103.625 in 2015, at 101.8125 in 2016 and at par in 2017 and thereafter. There is also an equity clawback for up to 35% of the bond at 107.25 before August 6 2015. Joint bookrunners were BCP Securities, Jefferies and UBS.
Folhapar to Make Offer for UOL
Brazilian media company Folhapar will make a tender offer for the minority shares of Brazilian internet access provider Universo Online with the intention of taking the company private. The public offering will be subject to approval by the CVM. The offering will be for 18,392,630 ordinary shares and 30,727,018 of preferred shares, representing 40.89% of UOL’s capital. Folhapar owns 60% of its total capital. The maximum price to be offered will be BRL17 per share. Universo went public in 2005.
GrupoSura’s Share Sale Seen Easing Ratings Pressure
Colombia’s Grupo de Inversiones Suramericana (GrupoSura) is targeting October for an up to $2.1bn equity follow-on to partially fund the recent acquisition of ING’s LatAm assets and to help it avoid any potential downgrade that could result from the purchase, say bankers. On Wednesday, the company’s bond dipped about a point after S&P put its BBB minus rating on negative watch. The agency said that incremental indebtedness from the transaction could hurt the company’s credit profile and that it would wait to see how GrupoSura planned to pay for the acquisition before acting further. “They don’t want to lose their investment-grade rating and they will do whatever they have to do to avoid getting a downgrade,” says a DCM banker familiar with the company. The conglomerate had in June approved the sale of up to 130m new shares, and now plans to raise $1.4bn-equivalent in the local markets and another $700m abroad. Banks could be named as soon as next week, according to an investor relations official. GrupoSura agreed this week to acquire the ING assets for EUR2.68bn ($3.9bn), consisting of EUR65m in assumed debt and EUR2.615bn in cash. It is putting up $500m in cash and can also tap credit lines it has with a pool of 6 international and 3 domestic banks. Bankers, however, think that the company will avoid leaning too much on bank debt in an effort to placate rating agencies. “They have a lot of financing options and they will go for whatever hits leverage ratios less and doesn’t compromise their ratings. Shorter-term bank financing will put a lot of pressure on their ratings,” the DCM banker says. The company official declines to disclose the group of banks or the terms on the credit facilities. GrupoSura also says it intends to combine the pension funds it bought this week with ones it owns already, placing them in a listed holding company at some point in the next few years. In addition to the assets purchased from ING, GrupoSura owns minority positions in Colombian c
Haiti Receives IDB Grant
Haiti will receive two grants from the IDB totaling $90m to help finance construction of an industrial park in its northern region and to support efforts to modernize its energy sector. Since the 2010 earthquake, the IDB has approved more than $340m in grants and disbursed $255m. About 70% of Haiti’s population has no access to electricity. Available generation capacity stands at less than one-third of the estimated 500 megawatt demand.
Minerva Shrinks, Discounts to Finish Convert Deal
Minerva’s convertible debentures priced below the range, to raise BRL190m ($121.17m), less than the BRL300m it had targeted. In what was thought to be the Brazilian market’s first-ever public sale of mandatorily convertible debentures, the meatpacker shrunk the number of 2015 notes to 200,000 from 300,000, and priced below the 97-103 range at 95. The interest rate – 100% of DI – and conversion price range – BRL6.00-BRL8.00 – were established prior to bookbuilding. Shares closed at BRL5.39 Thursday. The deal was fortunate to get done, after leads extended the bookbuilding period by one day as demand sagged in markets around the globe. Most issuers of late, including Brazilian Copersucar, and Uruguay’s Union Agriculture Group, have had to cancel equity deals, and nobody else in the region has launched. ECM bankers expect a lull in the new issuance market, until there is more clarity on the US debt situation, the euro-zone debt problems and more stability is seen in Brazil’s domestic market. Though the equity pipeline has been healthy all year, the bankers report shrinking backlogs of yet-to-be-announced transactions. Minerva plans to use the proceeds to repay existing debt, and for working capital. Minerva is rated BBB minus on a national scale. Goldman Sachs, Deutsche Bank and Banco do Brasil were leads.
Shell Forced to Sell Brazil Subsidiary
Royal Dutch Shell must sell the Brazilian aviation fuel assets it acquired from Cosan in 2009 for $75m, according to antitrust regulator Cade. Cade says that if Shell does not sell the assets within 60 days, it will be fined BRL20,000 a day. The transaction includes the sale of Jacta Participacoes.
Drogasil Deal Could Reach 11x Ebitda
Talk of a possible merger between Brazilian pharmaceutical companies Droga Raia and Drogasil has been growing louder, with some valuing the combined entity at around 11x forward Ebitda. Guilherme Assis, equity analyst with Raymond James, says deals in the sector have been going for around 7-8x Ebitda. However, that benchmark is primarily based on acquisitions done by Brasil Pharmaceuticals, the sector’s most active consolidator, and comes from looking at smaller acquisitions with fewer competitive advantages. Drogasil is perhaps a fairer comparison and it has been trading at around 10.5x forward Ebitda, which Assis sees as fair value, and is now at 11x after a 17% run-up in the company’s stock in recent days. Although Drogasil is the larger entity, analysts say Droga Raia is more likely to be the acquiring entity. “Droga Raia has more ambition,” says Iago Whately, equity analyst with Fator. He says the Pipponzi family, which controls Droga Raia, is unlikely to want to part with its controlling stake in the company. “The family controls and works in the company. They don’t want to leave the business, whereas Drogasil is controlled by an investor.” Drogasil is controlled by Carlos Pires Oliveira Dias, a member of the Camargo Correa family, which does not work in the business and sees the investment as a passive one, adds Assis. Although negotiations are ongoing between the two parties and no structure has been decided on yet, analysts say a deal is likely to consist of a share swap rather than a cash offer. “They have to keep the expansion plan. They cannot afford to lose a year or two of growing potential,” says Whately. Furthermore Drogasil may be reluctant to increase debt levels after recently reducing leverage ratios to a comfortable level. “Now that they have the cash, I don’t think they’re willing to lever up again just to do the deal. A share swap is more likely,” Assis says. The combined entity would control around 10% of the pharmaceutical market, putting it
Fitch Upgrades Petrobras Argentina to BB
Fitch has upgraded Petrobras Argentina to BB from BB minus, with a stable outlook, putting it two notches above Argentina’s country ceiling. The agency cited strong credit metrics, a competitive cost structure, strong internal cash flow, USD denominated export revenues, and support from the Brazilian parent. Another plus is the company’s ability to keep up to 70% of its export revenues offshore. Earlier this year, it further reduced Argentine export flows through asset sales. The agency expects the company’s net-debt-to-Ebitda ratio to drop below1.0x from the1.2x seen on March 31. Of the $1.3bn in total debt, $587m comes from capital market transactions, Fitch adds. “Low leverage mitigates any cash shortfall should price trends reverse or capex needs rise above current levels,” it says.