Sustainable power generation company IMPSA has recently been leaning on multilateral financing, but it is now looking at a broad array of funding options, including issuing in BRL now that it generates some 60% of its revenues from Brazil, Lucas Pescarmona, the company’s COO, tells LatinFinance. Given the long term nature of its projects, the Argentine company is seeking relatively lengthy tenors, but BRL would be a natural hedge against local currency revenues. “If we can do a 10-year in BRL we will do it,” Pescarmona says. It is thought the company may also qualify to issue infrastructure debentures in the local market, whose appeal has been heightened recently by the withdrawal of the IOF tax on local debentures whose use of proceeds qualify as an infrastructure investment. Indeed, bankers are already been heard preparing trips to see foreign investors about buying debt in this sector. This comes after IMPSA closed a $150m 7-year IDB loan to finance the construction of 3 wind farms in Brazil and another in Uruguay. The company is no stranger to the capital markets, and in March its Brazil subsidiary WPE International reopened its 10.375% of 2020 bonds for $65m, on reverse inquiry. That was the second retap after the Brazil-based turbine making unit initially sold the bond in September last year.
Yearly Archives: 2011
Investors Take a Shine to PacRu
Colombia’s Pacific Rubiales joined other issuers rushing to market Monday when it priced a $300m 10-year NC5 that was upsized by $50m to make room for more accounts after getting $250m in reverse inquiry. The Ba3/BB E&P operator priced the bond at par with a 7.250% coupon, tight to guidance of 7.375% (+/- 0.125), following initial 7.5% whispers. The bonds were trading up a point in the grey, according to one investor. The trade was largely comped against the borrower’s existing 8.75% 2016s which had been trading at 6.1%-6.0% YTM or at 5.57% on a yield to average life basis. “The deal was not cheap, but it is a good credit, safe haven and operates in the jurisdiction where there is local demand for the bonds,” notes one investor. Demand was driven by high quality asset management accounts mostly from the US. The funds will be used for general corporate purposes. Bank of America Merrill Lynch (BAML) was sole bookrunner on the transaction. Last month, PacRu converted CAD236m ($232m) of its 8% 2014 convertible debentures via an early conversion offer that drew participation from holders of 98.9% of the bonds. One of LatAm’s largest private oil and gas companies, Pacific Rubiales has principal operations in Colombia, Peru and Guatemala. The 8.75% 2016 was its last previous new issue, done in November 2009 when it priced $450m at an 8.95% yield via BAML and Citi.
Mexico Makes MILA Interest Official
Mexico’s stock exchange has signed a letter of intent to begin studies to join the Mercado Integrado Latinamericano (MILA). The move makes its interest official after several previous indications from both sides. It does not give any additional details or an indication of when it might be able to join the alliance of the Peruvian, Chilean and Colombian bourses launched this year.
NII Draws Large High-Yield Crowd
NII retapped its existing 7.625% 2021 bonds for $700m, upsizing from an original $500m size. The US-based operator of LatAm wireless assets, reopened the bonds at 98.50 to yield 7.852% or UST+600bp, in line with 98.50-area guidance. Order books came in excess of $1.4bn from a predominantly high yield focused audience. Proceeds are for general corporate purposes. Credit Suisse, Deutsche Bank, Goldman Sachs and JPMorgan led the B2/B+ transaction, done through the NII Capital unit. In the original transaction priced in March, NII issued $750m of the bonds to yield 7.625%, through Goldman Sachs, Credit Suisse, Deutsche Bank, JPMorgan and Morgan Stanley. NII is a provider of fully-integrated mobile communication services in Latin America.
Petrobras Completes Diversification Play
By pricing GBP700m ($1.1bn) 2026 bond Monday, Petrobras wrapped up its foray into the European market as it looks to expand its funding base and ease pressures on its core funding base. Bankers agree that the Brazilian oil company paid a premium to its dollar curve, but access to new pools of funding is seen as vital for a credit that needs to cover massive capex needs over the coming years, and the extra cost was probably worth the trouble, say some bankers. “You could say looking at comps in the euro markets that it was normal pricing, but versus the dollar curve they paid a decent new issue concession to access a different set of investors,” says one rival syndicate official. Still, in the end, it was able to raise $1bn equivalent with a lengthy 15-year tenor. Exactly how much the oil company would have paid to make a similar trade in the USD sector was a question for debate, but most bankers agreed that the 295bp G-spread seen on the company’s USD 2021s was the main starting point. In all, Petrobras placed the paper with about 100 investors, few of which were traditional buyers of the credit, namely large pension and insurance companies, with banks largely selling the deal off their high-grade desks. Demand topped the GBP1bn mark before the bond was priced at 97.876 with a 6.25% coupon to yield 6.379% or Gilts plus 370bps. Some cross-over US accounts were also seen nibbling at the edges seeing the trade as a yield play. “They can now come back in 2012 and do a decent size in dollars, so it makes a lot of sense [to tap euros and sterling],” says another senior banker away from the deal. “It may be more expensive, but what would have happened to their dollar spreads if they did everything in dollars?” This comes less than a week after the oil company tapped the euro market for $2.5bn equivalent with EUR1.25bn 6-year priced at 99.021 with a 4.875% coupon to yield mid-swaps plus 285bp, and a smaller EUR600m 10-year that came at 99.266 with a 5.875% coupon at MS+330b
Santander Chile Set for FO
Santander Chile is scheduled to price today a secondary share equity follow-on that is expected to raise more than $900m. The Spanish parent is looking to sell the 7.8% of the Chilean unit held by the Teatinos Siglo XXI Inversiones vehicle, to strengthen its capital position. With Santander targeting the sale of 14.74bn shares, represented by 14.19m ADS, the transaction could reach $922m in size based on Monday’s closing ADS price of $64.96. The shares have dropped 9.65% from the $71.90 close the day before the deal’s announcement November 22. Santander, Bank of America Merrill Lynch and Credit Suisse are managing the international portion, while Santander and LarrainVial will handle Chilean orders. The transaction comes as part of a larger selldown that also involves reducing its stake in its Brazilian operation. The announcement follows the renewal of a shelf to sell secondary shares of Santander Brasil. Santander could sell up to 8.2% of the Brazilian unit in a transaction that would fetch north of $2bn, though it has yet to specify any offering plans, and may opt for a series of smaller block trades rather than a large market deal. Santander has to cover a EUR6.47bn ($10.08bn) capital shortfall to meet new capital requirements imposed by European regulators. The bank has said it will retain earnings and sell assets in order to raise its core capital ratio to 10% from about 8% by June.
Uruguay Raises $1bn, Preps Tenders
Uruguay has sold UYP19.906bn ($1bn) in inflation-linked 2028 bonds ahead of an exchange offer to be held this week, as the sovereign seeks to de-dollarize its curve, extend duration and provide liquidity to its existing bonds. On the back of reverse inquiry amounting to half the transaction size, the sovereign was able to price the SEC-registered bonds at par with a 4.375% coupon, in line with 4.375% area guidance and whispers. The transaction was being comped against Uruguay’s existing 2030s which were spotted between 4.30% and 4.50% in yield terms, allowing little room for a new issue premium. Citi and HSBC managed the sale, rated Ba1/BB+. The next step in the liability process is a tender for Uruguay’s existing 5.0% inflation-linked 2018s, for which it will issue additional 2028s. Uruguay plans to offer holders UPY110.25 in new 2028s per UPY100 principal of the 2018s, it says. This would be followed by a third step in which a cash buyback offer is made to holders of 12 series of USD bonds due 2013-2036 and 3 series of EUR-dominated bonds due 2012-2019, with the sovereign spending up to $1.0bn total. The total 2028 bonds issued through Monday’s cash sale and the tender offer will not exceed $2bn.
LatAm Equity Sees Inflows
LatAm equity funds booked inflows of $19m in the week ended November 30, according to EPFR. Meanwhile, EM equity funds lost $1.51bn. In terms of performance, EM equity actually performed well during the week ending December 1, climbing some 7.84% over the period, though they are still down 16.36% on the year, according to Lipper. Similarly, LatAm funds were up 8.18% on the week, but down 18.86% ytd. Global small and mid-cap funds were up 7.29%, but down 11.11% ytd.
Mexico Holds Rates
Mexico’s central bank has left the benchmark interest rate unchanged at 4.5%. The bank based its decision on positive signs regarding domestic productivity and inflation, along with a continuing deterioration in the global economy, it says. “With respect to growth, Banxico discounts the fact that domestic aggregate demand has been improving recently,” say analysts at Nomura Securities. “In fact, it describes the balance of risks for growth as worse than before. Clearly, Banxico seems to be focusing on the downward revisions to Europe’s growth outlook, which is headed for a recession, and on the lower forecasts for the US economy by the Fed.”
PDVSA Turns to Chinese Credit to Guarantee Brazil JV
Venezuela’s PDVSA has announced that a $1.5bn credit line will serve as a guarantee for its 30% participation in a joint refinery with Petrobras. This came just a day after the Brazilian oil company agreed to give PDVSA more time to finalize the transaction. Cash and a credit line by the China Development Bank will insure the project’s advance, says PDVSA. A spokesman for the company declined to offer more details. On Thursday, Petrobras announced it had given PDVSA 60 more days to settle its affairs on needed loan guarantees with Brazil’s BNDES to finalize its participation in the $13.36bn project for the Abreu e Lima refinery. The PDVSA statement quotes the company’s president, Rafael Ramirez, saying that it has made the needed money available and “all that is left is for BNDES to do the logistical work” necessary to move forward. Under the terms of the Pernambuco-based refinery, first signed in March 2008, PDVSA would take a 40% stake in the plant and become a main heavy crude supplier for the refinery. The total investment in the plant was originally expected to reach $4bn but now it is estimated at $13.36bn.