Peru’s central bank is expected to keep its rate at 3.00% today. “The central bank is likely to take comfort in the near term from benign inflation data and slowing economic growth to keep rates on hold,” says Morgan Stanley. Barclays agrees and adds that a hike could take place in March, depending on inflationary conditions. Annual inflation in December came in at 2.08%, at the midpoint of the target range, according to the central bank.
Yearly Archives: 2011
Posted inDaily Brief
Philip Morris Dumps Colombia Tobacco
US-based cigarette company Philip Morris International says it has decided not to pursue the acquisition of Colombia’s Protabaco. The buyer says the conditions the Colombian regulators imposed “ultimately proved to be too burdensome.” Philip Morris does not say what the conditions were. Philip Morris agreed to buy Protabaco in July 2009 for $452m in cash, but Colombia’s Superintendencia Financiera blocked the deal in June 2010, saying it could significantly reduce competition as the combined company would have had 78% market share. In October, it allowed the buyer to pursue the target, but only if it shed some assets, among them the Premium cigarette brand, according to local press reports. Colombian equity analysts say British American Tobacco (BAT), which has also been rumored to be interested in buying Protabaco, would probably experience the same problems should it try to buy the target. BAT is also a market leader with brands such as Kool, Kent, and Belmont. Had it been approved, the acquisition would have been Philip Morris’ second in Colombia. In 2005, it bought Compania Colombiana de Tabaco, known as Coltabaco, the largest cigarette manufacturer in that country, for $300m.
Posted inDaily Brief
Bancolombia Places Non-Subordinated Bond
Bancolombia saw strong demand for a $520m 5-year bond, its first-ever non-subordinated issuance in dollars. Colombia’s largest bank, active in the capital markets in recent months, got about $1.6bn in total demand, according to a banker on the sale. The Baa3/BBB minus 2016 priced at 99.156 with a 4.250% coupon to yield 4.440%, or UST plus 230bp, the tight end of 230bp-240bp guidance. Whispers at the announcement Wednesday morning were at UST plus mid 200s, according to investors. Comparing to the issuer’s curve is tricky, investors say, as Bancolombia’s other dollar bonds are subordinated. Traders spot the most liquid, a 2020, trading to yield around UST plus 240bp. One New York EM investor considers the pricing fair, noting the new bond was trading up 0.25-0.50 Wednesday afternoon. Proceeds are marked for general corporate purposes. JPMorgan managed the sale. The bank sold a $315m equivalent local bond last month, which followed a $620m 2020 tier 2 bond in July, its first international sale in 3 years.
Posted inDaily Brief
BR Malls Hopes To Reanimate Perps
The resurgence of Brazilian perpetual bond issuers last year had its ups and downs, but BR Malls is hoping investors will have appetite. The BB/BB minus shopping mall developer is planning to roadshow a new senior perpetual NC5 bond, according to investors. This would mark its second such issuance. A 3-team tour will meet buyers in Singapore, Hong Kong, New York, Boston, London and Switzerland Monday through Thursday. BTG and Deutsche Bank are managing the transaction. After oversupply pressured secondary prices in October, Brazilian issuers Cosan and General Shopping priced successfully. In the last perpetual of 2010, BB minus/Ba3 General Shopping got a yield of 9.75% on its debut in the format. Developer Cyrela met investors in November, but elected to wait on a possible perp and is heard still considering a deal. BR Malls’ last dollar bond was a $175m perp done in November 2007, through Citi and UBS.
Posted inDaily Brief
BdB Considers Euro Debut
Banco do Brasil (BdB) is meeting the European buyside next week, with an eye on its first euro-denominated issuance. The bank, considered one of the highest-quality LatAm candidates for euro issuance since a pickup in the class last year, plans to visit London, Paris, the Netherlands, Germany and Switzerland next week Monday through midweek, according to investors. The bank has not divulged details of any deal, announcing only the meetings and that a transaction could follow. BdB, Banco Votorantim, Deutsche Bank and BNP are managing the process. The bank’s last sale was a $600m 2020 tier 2 bond in September, through Bank of America Merrill Lynch, HSBC and Votorantim. European investors hungry for diversity have welcomed high-quality Brazilians in recent months, with Telemar (BBB/Baa2) raising EUR750m in 2017s at a 5.330% yield in December, after BNDES (BBB minus/Baa2) got an identical size and maturity at 4.243% in September.
Posted inDaily Brief
CFE to Retap Local Bonds
CFE’s dual-tranche deal expected January 11 will be for up to MXP9bn, according to a banker on it. It is a retap of its 4-year floating and 10-year fixed rate bonds, according to a regulatory filing. Pricing has not yet been determined, adds the banker. BBVA Bancomer, Banamex and ING are joint leads on the sale for the federal electricity company. The bonds are rated AAA on a national scale. Proceeds will go toward working capital and to refinance existing debt. The original deal priced December 2. The 10-year tranche was for MXP9.0bn, after total orders reached MXP14.6bn. The bonds priced to yield 7.96%, or Mbonos plus 120bp, in line with guidance, according to bankers on that sale. The 4-year was for MXP5.0bn, on MXP8.4bn in demand. That tranche priced at 26bp over TIIE, tight to guidance of 30bp.
Posted inDaily Brief
Baja Mining Seeks Project Financing
Minera y Metalurgica del Boleo, the Mexican subsidiary of Baja Mining Corp. is looking for $823m in project financing. The funds will go toward the construction of the Boleo copper, cobalt and zinc mining project, which will be constructed in Baja, Mexico, according to Deutsche, which has been mandated for the agency roles. The financing will be divided into 5 tranches of senior debt, with funding coming from commercial banks and export credit agencies, and a subordinated debt tranche, says the bank. Deutsche will work with the US Eximbank to oversee the financing during construction and operation, it adds.
Posted inDaily Brief
Iberdrola Denies $8bn AEI Buy
Spain’s Iberdrola is denying reports that it has agreed to buy Ashmore Energy International (AEI) for around $8bn. However, the denial may only be about price, as bankers familiar with the deal say negotiations are at an advanced stage. The reported price, however, is too high, they say. The Houston-based energy company with assets in South America had tried listing on NYSE for as much as $863m for 50m shares in the company, 33m from existing investors, in 2009. After delaying, and then cutting, its IPO price to $12.5 a share from an original $15.0 a share, the offering would have given the company a market cap of $3.2bn, down from $3.9bn. Bankers with knowledge of the situation say the company is more likely to sell at a price around this range. Iberdrola is apparently not alone in the bid. There is a consortium of other strategic and financial investors apparently involved with the Spanish group, says a banker close to the transaction. “From a strategic standpoint, [AEI’s assets] certainly fit well with Iberdrola’s strategic mix,” says Travis Miller, a utilities equity analyst with Morningstar. Goldman Sachs is leading the sale, while Itau is also advising the seller. Citi is advising the buyers’ consortium. According to bankers not involved in the deal, AEI has been trying to sell itself since its failed IPO, advised by Goldman. Credit Suisse, Citi, and JPMorgan. At the time, AEI, a former subsidiary of Enron, reported annual revenue of $8.2bn for 2009, down from $9.2bn in 2008, according to SEC filings. It also reported adjusted Ebitda of $1.1bn for 2009, up from $1.0bn in 2008. Net debt also fell to $2.9bn as of year end 2009 from $3.0bn in 2008. For the 6 months ending June 10 2010, it reported $2.3bn in revenues and $510m in adjusted Ebitda. AEI declines to comment. AEI operates in 19 countries in LatAm, Central and Eastern Europe and Asia in power distribution, power generation, natural gas transportation and services, natural gas distribution and retail fue
Posted inDaily Brief
LatAm Leads Global Confidence Poll
For the first year ever, LatAm leads the world for business optimism, according to Grant Thornton’s 2011 International Business Report (IBR). “Confidence levels over economic performance are higher in Latin America than any other part of the world,” says the report. Across the region, some 75% of privately held business owners are optimistic about their region’s economic performance in 2011. This compares to +50% in Asia Pacific (ex-Japan) and +26% in North America. Europe is the least optimistic region at +22%. Within LatAm, Chile (+95%) scores the highest optimism of any country surveyed followed by Brazil (+79%), Argentina (+70%) and Mexico (+64%). “If the economic story of the last decade was about the BRICs, these results suggest the next decade will be about Latin America,” says Ed Nusbaum, CEO of Grant Thornton International. The IBR notes that confidence in China has dropped to +42%, from +60% last year. It adds that businesses around the world expect weak investment in 2011. The IBR is done by market research agency Experian Business Strategies, commissioned by Grant Thornton, the accounting and consulting firm.
Posted inDaily Brief
Rio Negro Gets IDB Funds
Argentine province Rio Negro will receive a $30m loan from the IDB to improve fruit and vegetable production, mining and tourism. The loan will be for 25 years and has a 4 year grace period, says the lender.