Mexico’s Cemex is heard seeking ambitious spread levels on an up to MXP2.8bn ($213m) local asset-backed bond as it looks to refinance outstanding debt at a lower rate. Yet whether the cement company will achieve its pricing goals is still a matter for debate. Some investors are already heard drawing a starting line at TIIE+200bp if the borrower wants their participation in what is expected to be a 4 or 5-year bond backed by account receivables held by a trust. However, Cemex is heard sounding out accounts with a much tighter and audacious plus 80bp spread. Pricing is scheduled for August 4 and the bond will carry a similar structure to Cemex’s MXP2.2bn of asset-backed bonds due December 2011, which were priced at TIIE+250bp in 2009. Those bonds were also backed by a trust that held account receivables originated by Cemex Mexico and Cemex Concretos. “The company is exercising a call option in which it wants to refinance at a lower rate in an uncertain market,” says an investor who may opt out of this transaction but participated in 2009. “They want to rollover debt at a low rate at the expense of higher costs to investors.” The new bonds are expected to carry a local mxAAA rating. Proceeds are partly going to refinance the existing 2011s and for working capital. The Mexican cement company was last in the dollar market earlier this month with a $650m retap of its existing 9% 2018s through Citi, essentially helping it cover its financing needs for this year and next. IXE is the sole lead on the local transaction.
Yearly Archives: 2011
Chilean Investor Readies Local Bonds
Inversiones la Construccion is scheduled to start marketing today a UF2.5m ($118m) bond sale in Chile’s local market, according to bankers on the deal. It is offering investors a choice of 6.8% 2016 CLP bonds, 3.2% 2016 UF-denominated bonds and 3.6% 21-year UF bonds, with pricing scheduled for August 2. Inversiones la Construccion is looking for funds to refinance debt. Celfin and IM Trust are managing the sale, rated AA/AA+ on a national scale. The issuer is an investment vehicle of a construction trade association called Camara Chilena de la Construccion. It holds stakes in the AFP Habitat pension fund, insurance companies Camara and Isapre Consalud, as well as clinic operator Red Salud and other companies.
Conditions, Pricing Leave YPF Shelving Bond
Investors and YPF failed to reach a compromise on pricing Monday against an already uncertain backdrop, forcing the Argentine oil concern to abandon attempts to sell its new 8-year, 7-year average life bond, say buyside sources. It is thought the market’s idea of a new issue premium and disagreements over pricing against comp Argentine oil comp Pan American Energy were just too much to bear for a company that had its heart set on a marquee trade. Indeed, with no immediate financing needs, YPF can afford to wait for better conditions. “YPF wanted to price way inside Pan American and investors wanted similar levels to PAE,” says an investor. By last week, however, leads were heard arguing that a new YPF or PAE 7-year would trade in the secondary market at around 6.15%-6.25% and with a 50bp new issue premium, a primary offering could come at around mid to high 6s. However, with investors heard asking for high 6s to a 7% handle, leads had little room to maneuver on pricing should markets suddenly turn south on further volatility emanating from the US and Europe. “It was a wide enough margin where we knew there wasn’t going to be any progress,” adds an analyst following the company. Broader market unease over debt problems in the US and Europe certainly made life difficult for the Argentine borrower, which was in no rush to pay a volatility premium. In this environment, some investors were simply unwilling participate in what was a relatively small corporate transaction, despite the company’s blue chip status in Argentina. “It doesn’t make sense to invest in a corporate that would be considered less liquid than the sovereign,” adds a second investor. The sovereign’s New York law 2017s have been trading to yield 8.072%. The oil and gas concern was looking to raise $300m-$600m size via bookrunners BNP Paribas, Citi, Credit Suisse, ING, Itau, Santander and Standard Bank. YPF is rated Ba2/BB minus from Moody’s and Fitch.
Copersucar IPO Lowers Pricing amid Turbulence
Brazil’s Copersucar has lowered price guidance on its IPO scheduled to price today, and is now aiming for a total size of about BRL1.49bn ($944m). The issuer is heard getting a solid anchor order at BRL12.00, and is now planning to build the book there, ducking under its original BRL14.50-BRL18.50 range. It had been aiming for more than BRL2.0bn. The sugar and ethanol cooperative is offering 86.5 primary and 21.6m secondary shares, meaning a BRL1.49bn total sale if done at the new price and a 15% greenshoe is included. A 20% hot issue is also available. “This is not an attractive proposition at those levels,” a Sao Paulo-based analyst says of Copersucar. He estimates a valuation of 16x 2011 Ebitda at the bottom of the original 14.50 range, compared to 7x for larger listed competitor Cosan, and notes he would see the valuations becoming more attractive at around BRL10.00.This year has been particularly cruel to companies attempting IPOs, and the past weeks have been challenging for would-be issuers of all types. The Bovespa lost 1.1% Monday, after shedding 3.4% last week. The 48-member group is seeking funds to shore up its capital structure ahead of planned investments, including BRL200m to upgrade its Santos port. The company would have about a 26% float after the sale, assuming the greenshoe is added. BAML, Credit Suisse, Goldman Sachs and Itau are leads. Copersucar handles sales, marketing, storage, distribution and other services for its member group of independent Brazilian sugar and ethanol producers, as well as non-exclusively for another 50 non-members, in the states of Sao Paulo, Parana, Goais and Minas Gerais.
Costa Rica Gets World Bank Loan
Costa Rica will receive a loan of up to $400m from the World Bank to support the country’s public universities. The lending program will also support Costa Rica’s infrastructure development initiatives.
Fitch Puts $150m Size on UVA’s 2018
Fitch has put a $150m size on Brazilian sugar company UsinaVista Alegre’s new senior unsecured 2018 after rating it B minus Monday. The rating agency cited the company’s high leverage and refinancing risks, noting it requires more financing to cover expansion and crop investments. On the positive side, Fitch points to its logistical advantages and attractive cost structure. Operating cash flows are also increasingly being generated from the more stable energy cogeneration sector. “UVA’s high leverage mainly reflects its expansion program (BRL400 million) that was financed with a mix of own funds (BRL120 million) and debt (BRL280 million),” it says. As of March 31, total adjusted debt reached BRL364m comprising loans from banks and development bank BNDES, Fitch calculates. Proceeds from the new issue are slated to repay some of the short-term bank loans. The borrower is visiting investors with BTG Pactual. It will be in London today, in New York on Wednesday and in Los Angeles on Thursday.
IFC Ups Banco Fibra Stake
The IFC and its asset management company have made a BRL160m ($100m) equity investment in Brazil’s Banco Fibra. The purchase takes the IFC’s stake to 13.0% from 7.9%, and is done in the interest of supporting credit expansion to small- and medium-size enterprises in Brazil. The IFC has put up BRL80m, and the IFC Asset Management Company’s IFC African, Latin American, and Caribbean (ALAC) Fund has put in an equal amount to become a shareholder with an approximately 5.1% position. The Steinbruch family’s Grupo Vicunha vehicle controls the bank, with 80% of the shares. The capital investments are subject to regulatory approval.
Kuehne + Nagel Buys Eichenberg
Kuehne + Nagel, a Switzerland-based logistics provider, has acquired Brazil’s Grupo Eichenberg for an undisclosed amount. A spokeswoman for Kuehne declines to say whether the company used a financial advisor on the deal. Eichenberg has around 700 employees, and provides integrated logistic solutions.
Peru Jumps on Humala Appointment
Peruvian assets rallied Monday on news that President-elect Ollanta Humala had asked central bank president Julio Velarde to stay in his post for another five years, signaling a continuation of market-friendly policies that preceded his presidency. Investors also found further comfort in talk that Humala would possibly appoint deputy finance minister Luis Castilla as economy minister. “(This) consolidates market expectations of policy continuity and allows for a further reduction in policy risk premium and convergence of credit spreads to peers,” notes RBS in report. Humala is expected to officially announce his cabinet appointments Wednesday. The Peruvian stock market leapt 4.62% to 21,285, while the sovereign bond curve jumped a good ¾ of a point, with the 2019s ending the day at 121.25-122.00, according to one trader.
Starwood Buys Stake in MRV
US private equity firm Starwood Capital has acquired a 33.3% stake in MRV Log for BRL250m ($159m). Meanwhile, existing shareholders will contribute BRL100m in equity for the subsidiary of Brazilian real estate company MRV. MRV says the funds will be used to increase construction capacity and expand its real estate portfolio. Credit Suisse advised MRV on the deal. Starwood did not use an advisor on the deal.