Mexico’s Banco Inbursa has issued MXP4.9bn ($422.64m) in 3-year floating rate bonds, after receiving 1.1x demand, says a banker on the deal. The bonds priced at TIIE+20bp, flat to guidance and at the same levels achieved by Santander Mexico earlier this month when it reopened its MXP5bn 3-year bond for MXP730m. A non-participating investor says that while Banco Inbursa is a good credit with a AAA rating on a national scale, spreads were not attractive enough to warrant participation. Bankers on the deal say the book size was smaller because Inbursa had capped pricing at TIIE+23bp. Santander, BAML and Actinver were the leads. Banco Inbursa last came to the market in April, when it priced MXP4.5bn 3-year at TIIE+20bp.
Yearly Archives: 2011
Posted inDaily Brief
Kuo, Herdez Buy US Food Company
Mexico’s Grupo Kuo and Grupo Herdez have agreed to acquire Texas-based avocado and guacamole producer Fresherized Foods. The companies decline to disclose the value of the acquisition, but Fresherized has annual sales of a round $140m. Megamex Foods is the acquiring entity, a JV between Herdez del Fuerte and Hormel Foods. Herdez del Fuerte is a JV between Kuo and Grupo Herdez. No advisors were used on the deal, according to a Kuo spokesperson, who adds that the acquisition was financed with cash on hand and that there are no plans to go to the capital markets to finance the deal.
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Los Grobo Pulls Brazil IPO Plan
Argentine grower Grupo Los Grobo is postponing the plan to spin off some of its Brazilian businesses in an IPO, according to bankers managing the sale. This comes after market conditions and weak demand forced the cancellation of fellow agricultural sector IPO Copersucar. The spinoff was to combine Los Grobo’s agricultural services businesses, the agricultural property acquisition and development activities of Sollus Capital, of which LG would own 100%, and the sugar and ethanol business of Companhia Mineira de Acucar e Alcool (CMAA), of which LG would own 69%. The principal owners are founding Grobocopatel family and Vinci Partners-backed investment company Sollus Capital. Bradesco, BTG Pactual, Credit Suisse and Itau were hired to manage the sale.
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Peru Market Soars on Humala Appointments
Peru’s market soared almost 2% midday Thursday on news of several market-friendly appointments to the cabinet of President-elect Ollanta Humala, before closing slightly below its opening level. The appointments include Luis Castilla as minister of finance, Carlos Herrera as minister of mining, Salomon Lerner as chief of staff, and Kurt Burneo as minister of production. Several of the appointments had been anticipated, and cheered as proof that Humala was taking a centrist stance. According to Nomura, news will continue to support a rally in Peruvian assets, while the ratings agencies could upgrade the sovereign within the first three months of the new administration. Peru is rated BBB minus/Baa3.
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S&P Preps Panama for Upgrade
S&P has revised the outlook on Panama’s BBB minus rating to positive from stable, setting the stage for an upgrade over the next year or so should the country’s economy continue to perform well. Between 2005 and 2010, Panama’s GDP grew on average by 8%, with Fitch forecasting 7.5% for this year and an average of 5.5% over the 2012-2015 period. “In our view, higher growth, along with rising investment in Panama’s infrastructure could lead to faster-than-expected improvement in the sovereign’s financial profile and long-term economic resilience,” says S&P credit analyst Roberto Sifon Arevalo.
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Standard Chartered Closes LatAm Sov Desk
Standard Chartered has closed its LatAm sovereign and CDS trading business, citing decreased trading volume. According to a Standard Chartered spokesperson, the closure is specific to the sovereign and CDS products, and does not reflect a withdrawal from DCM or LatAm.
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UVA Talks Double Digits
Brazilian sugar and ethanol producer Usina Vista Alegre (UVA) is out with preliminary guidance of 11% on a 7-year NC4, coming in-line with whispers heard earlier this week. Pricing could take place as soon as today. Size is expected to be between $150m-$200m on the 144A/Reg senior unsecured bond, which marks the issuer’s debut in the international capital markets. Double digits are seen as necessary to compensate investors buying into a credit that has a leverage ratio of 5.3x fueled by recent growth plans. Tight liquidity is also an issue. As of March 2011 the Sao Paulo-based company had BRL12.8m of cash versus BRL 124.5m in short-term debt, which will partly be paid down through proceeds from this offering, Fitch says. “Their problem is liquidity,” notes a London-based EM investor who has opted not to participate. Grupo Virgolino de Oliveira (GVO), a member of the Copersucar cooperative, is considered a direct comp to UVA. It came to market earlier this year with a $300m 7-year NC4 that was priced at par to yield 10.50%, the wide end of 10.25%-10.50% guidance. However, GVO is thought to have a stronger liquidity position than UVA and can count on Copersucar as a guaranteed buyer. UVA wrapped up roadshow in Los Angeles on Thursday. BTG Pactual is sole lead. Ratings are B minus/B3 by Fitch and Moody’s.
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Venezuelan Supply Talk Gets Louder
Talk of an imminent Venezuela bond continued to swirl Wednesday, with RBS citing local rumors about an up to $4bn 12% 2031. The specific details associated with market chatter suggests that there may be some weight behind the rumors, though several shops including RBS say the sovereign is under no pressure to issue. If the sovereign were to issue a new 2031, RBS calculates that it will likely be priced at 101.00, but with a fair value yield to maturity and secondary level of 14.8% and 82.20, respectively. Such USD deals are typically sold at the official FX rate to locals who arbitrage against the weaker parallel rate by selling the bonds to foreigners at a steep discount. It is thought that the government will opt for a longer dated bond to smooth out debt maturities. Nomura, however, believes that the issuer may well be targeted at importers in need of dollar assets and could come in a single transaction. However, the shop has its doubts about an imminent issue partly because the Minister of Planning and Financing Jorge Giordani has expressed opposition to such issues. That said, Nomura expects more supply later in the year as the government seeks to replenish the Sitme, the state-run FX system.
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Queiroz Galvao Crosses Finish Line
Queiroz Galvao Oleo e Gas (QG) finally wrapped up a $700m 7-year 3.8-year average life bond late Wednesday, pricing it at 99.35 with a 5.25% coupon to yield 5.45% or 480.9bp over, coming at the tight end of 5.5% area guidance. The deal was not necessarily a blowout with books heard reaching a modest size, according to investors. But the results were seen as satisfactory enough for an issuer that required more than its fair share of credit work at a time when market volatility has left investors particularly cautious. Some rival bankers had seen 5.5% area whispers as a screaming buy especially considering the bond’s 4-year average life and the 200bp plus premium to Petrobras’s 2016s which have been trading around 3.5%. Further positives included the Baa3/BBB minus rating and a collateral package that carries a first priority lien on all the issuer’s tangible assets and project accounts. Odebrecht’s similarly structured 2021s (BBB/Baa3) were seen as an obvious comp, although they are longer dated. They were trading Tuesday at around 5.36%. OG’s amortizing bond with a 3.8-year average will be used to refinance debt incurred through its Atlantic Star and Alaskan Star drillships which both have long-term contracts with Petrobras. Odebrecht’s issue was used for similar purposes though its vessel was a new build. It marked the first large scale bond of this kind and raised hopes that similar infrastructure trades would follow suit. Earlier Schahin Engenharia had also completed a smaller $270m 2016 deal in October 2010 to refinance debt on the operating Lancer drillship in a BBB rated deal, which priced to yield 5.85%. HSBC and Santander acted as global coordinators on the sale, with Citi coming in as a bookrunner.
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Tuscany Expands In LatAm, Secures Loan
Canada-listed Tuscany International Drilling has agreed to acquire France’s Caroil as it looks to create a leading EM drilling company with activities in both Latin America and Africa. The transaction’s enterprise value based on closing June 20 stock prices has been calculated at $202m, before transaction costs, with a valuation EV/Ebidta ratio of 4.2x. Tuscany is paying for the acquisition with $120m in cash, 82.5m of common shares and another 27.5m of non-voting common share warrants. Both companies are involved in onshore drilling services in Latin America. At the same time, Tuscany is securing a $220m senior secured guaranteed loan and revolving credit facility through Credit Suisse, which is already heard sending invitations to banks to participate. Banks are being shown a $195m 5-year amortizer and a $25m 3-year revolver, both with margins of L+650bp, drawn in the case of the revolver. Proceeds are going toward the potential purchase ($115m) and the refinancing of existing debt at the Tuscany level ($80m). Jennings Capital Inc is acting as Tuscany’s financial advisors, while AM Capital is doing the same for seller Maurel & Prom.