Mexican homebuilder Desarrolladora Homex has seen its ratings lowered by S&P, to B+ from BB minus. S&P cites Homex’s performance as “below our expectations, on greater leverage, negative free operating cash flow, higher short-term debt, and tight covenant headroom.” It expects the builder to need additional external funding, to cover for the negative cashlfow and still make expected capital investments. The outlook is stable.
Yearly Archives: 2011
Posted inDaily Brief
Inbursa Eyes Second Local Bond
Mexico’s Banco Inbursa is considering issuing an additional MXP2bn ($145m) in 2-year floating-rate notes in the domestic market next week, in addition to the MXP3bn sale scheduled for today. “The dates are close, so if we don’t issue the new bonds [next week] we will postpone that issuance until 2012,” notes a banker on the deal. Banamex and Inbursa are managing the proposed new transaction which is still pending authorization. Price talk on today’s MXP3bn 2-year issuance is between TIIE+15bp-25bp and is a good starting point for price talk on the second transaction, the banker says. Proceeds will be used to fund bank operations. HSBC and Inbursa are leading today’s transaction, rated AAA on a local scale. Inbursa last issued in July, pricing a MXP4.9bn 2014 bond at TIIE +20bp via Actinver, BAML, Inbursa and Santander.
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Isolux Wraps up BRL Bond
The Brazilian unit of Spain’s Isolux has completed a BRL140m ($76m) domestic bond transaction, according to Anbima. Isolux Energia e Participacoes will pay the DI+5.35% on the 2019 bond, amortizing twice a year beginning in 2013. Banco Votorantim managed the deal, done under the rule 476 restricted format. The Spanish renewable specialist plans to IPO its unit in Brazil – the recently anointed headquarters of its EM –wide operations – in 2012.
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LatAm DCM Volumes Hit Record Levels
LatAm local and cross-border DCM volumes hit a record $125.4bn year to December 16, exceeding last year’s high water mark of $124.0bn. It is a similar story with international deal volumes on a standalone basis, which reached$92.9bn versus $85.0bn last year. However, Brazilian and Mexican issuers together accounted for 68% of volume in 2011, down from a 77% share in 2010. Citi led the league tables if local and cross-border transactions are counted, with 51 deals worth $13.6bn under its belt through December 16. On that basis, it looks set to edge out Deutsche Bank ($13.5bn from 38 transactions) and HSBC ($12.6 from 86 deals). Nevertheless Deutsche Bank leads in terms of cross-border transactions ($13.0bn from 34 deals), ahead of Bank of America Merrill Lynch ($9.8bn from 41 trades) and Citi ($9.7bn from 24 issues). Deutsche, however, been helped by several large Reg S trades from the Venezuela sovereign and state-owned oil company PDVSA. Banks like the business such trades generate but are often critical of their inclusion in league tables given they are largely placed with a captive local investor base. Without those deals, JPMorgan wins a tight race with $9.9bn from 38 cross-border only deals, and HSBC takes the overall crown with $13.2bn from 96. Both GBP issuance ($1.9bn) and EUR issuance ($3.8bn) set records in 2011. Citi led LatAm in DCM fees ($70m), followed by Credit Suisse ($48m) and JPMorgan ($44m). LatAm’s $125.4bn total volume comes out of a record $816.1bn from EM, and a global total of $5.6trn, which was down 8% from 2010.
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Retailer Luiza Readies Domestic Issue
Magazine Luzia, the Brazilian retailer that held an IPO earlier this year, plans to raise BRL200m ($108m) in local bonds, it says. The 2014 note should pay up to 113% of the DI benchmark. The retailer is seeking funds for working capital and to extend its maturity profile. It could not be reached for comment on the managers of the sale, to be done under the rule 476 restricted format.
Posted inDaily Brief
UK PE Enters Brazil with Cable Buy
Private equity firm 3i has spent BRL100m ($54m) to acquire a minority stake in cable TV and broadband company Blue Interactive Group, marking the private equity firm’s first foray into Brazil. Officials at Blue Interactive declined to discuss the actual stake to be acquired, the valuation of the transaction or the advisors, if any, involved in the deal. A 3i spokesman says that 3i’s stake “is significant but still a minority holding.” Blue Interactive registered revenues of more than BRL100m in 2010 and will register a similar figure again in 2011, the company says. Blue Interactive was created in 2009 and since then it has led an acquisition campaign hoping to achieve scale and growth in the cable TV and broadband business. 3i estimates that the cable TV and broadband markets in Brazil grew 19% and 34% respectively during the 2005 through 2010 period. The spokesman notes that 3i has analyzed more than 200 companies since opening its doors in Brazil on April 1, and plans to make two Brazilian investments a year, focusing on the consumer sector that caters to the country’s growing middle class.
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Brazilian Builder Makes Domestic Placement
OAS Engenharia has wrapped up a BRL300m ($167m) deal in Brazil’s domestic bond market. The Brazilian builder’s 2016 bond pays DI+2.0%, and amortizes twice a year beginning in 2014. Banco do Nordeste do Brasil managed the sale, done under the rule 476 restricted format.
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CFE Plots Domestic Bonds
Mexico’s Comision Federal de Electricidad (CFE) is preparing to raise up to MXP8.77bn ($635m) in two deals in the local bond market in the new year. The state-owned utility is planning to sell up to MXP6bn in 10-year fixed and floating-rate bonds, with an eye on a January 10 pricing. Proceeds will be used to cover infrastructure project expenses. Ixe and Scotia Capital are managing the sale, rated Aaa on a national scale. Separately, CFE is readying an up to MXP2.77bn 3-year floater and targeting a pricing date of January 24. This will be done through a recently-renewed Bancomext-guaranteed trust to pre-fund subcontractors’ authorized expenses under a special infrastructure program. Scotia is managing this transaction, rated AAA on a national scale. CFE issued under this program earlier this month, raising MXP1.358bn in 4-year bonds at TIIE+35bp, through Ixe.
Posted inDaily Brief
Light Details Debenture
Brazilian utility Light has initiated the sale process for a BRL425m ($236m) debenture offering. The 2019 local bonds pay the DI+1.19%, and amortize in equal parts in each of the final 4 years. The issuer plans to use proceeds to repay short-term debt. Banco do Brasil is managing the sale, done under the rule 476 restricted format.
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OSX Considers Norwegian Niche
The Norwegian bond market and mezzanine financing are among some of the options OSX is considering, says Roberto Monteiro, the company’s CFO. The Brazilian shipbuilder, which recently saw its first FPSO delivered in Rio de Janeiro, may receive a welcome reception in a Norwegian market already familiar with the offshore oil sector. “Many oil companies do bonds in Norway,” says Monteiro. “This is something we may consider. It is not a market where you can finance an FPSO, but it is an interesting strategy for a bridge.” In a good year, the Norwegian market absorbs some $5bn-$6bn in debt with tenors ranging from 3 to 7 years, he adds. This comes as the company puts together a mezzanine loan of around $50m in size to bring the debt component of the recent OSX-1 financing to 80%. This is another niche that OSX is willing to explore. “You can raise $100m here and there. You can always be in the market rolling this [over],” he adds.