Asians, Americans and Europeans acquiring regional assets is likely to remain the dominant theme for M&A in Latin America for at least the remainder of the year, bankers say. “The pillars of what we’ve seen over the last few years continue to be valid, which is Brazilians consolidating the local markets, and foreigners moving into LatAm as a whole,” Jean-Marc Etlin, head of Itau BBA Investment Bank, tells LatinFinance. Private equity activity in the region is also a consistent driver, he says. Larger and cash-rich companies in LatAm looking beyond the region is still a less established trend. Bankers say the segment has barely scratched the surface of European divestures in LatAm, and there could be many more to follow. That said, there have also been some interesting additions – ranging from Spanish toll road operator Abertis to Dutch vitamin producer Royal DSM – by Europeans who can still afford to buy. “Buying in Europe is not as easy as people think. It is easier for Europeans to buy in Latin America,” Gerardo Mato, CEO of HSBC global banking, Americas, tells LatinFinance. “If you are cash rich, you are trying to buy companies at very acceptable multiples, and try to grow it from there. We are seeing Latin Americans interested in buying European assets, and what we are seeing is also a lot of Europeans reassessing whether to sell at current multiples.” The league tables, heavily influenced by AB Inbev’s $20bn purchase in July of a 50% stake in brewer Modelo, put Bank of America Merrill Lynch in the lead with $43.30bn from 20 deals through August 24, according to Dealogic. The US shop is followed by JPMorgan ($41.00bn from 26) and Lazard ($32.65bn from 15). BTG Pactual has earned the most revenue, with $75m, or 49% of the pool.
Yearly Archives: 2012
Moody’s Rates BCI Notes
Banco de Credito e Inversiones’ (BCI) proposed 2017 global fixed rate senior notes have been rated A1 by Moody’s, with a stable outlook. The ratings agency says the A1 foreign currency senior unsecured debt rating takes into account the Chilean bank’s local currency rating and the notes’ seniority, as well as the bank’s own support structure.
Pacific Rubiales Upsizes Facility
Colombian oil producer Pacific Rubiales has upsized its $600m revolving credit facility to $700m. Participation includes 23 banks, including Colombian and foreign institutions. The deal is expected to close in the first half of September, according to a source familiar with its plans. The facility consisted of a $400m dollar tranche and a $200m-equivalent peso tranche, which has been increased to $300m-equivalent. The new facility replaces an existing $350m revolver. Funds will be used to help the company maintain liquidity to cover any short-term funding needs. Bank of America Merrill Lynch and Corficolombiana are managing.
Promigas Plots Issue
Colombian natural gas transport company Promigas is looking to issue approximately COP1trn ($548m) in local and international markets as soon as the end of September, according to sources familiar with its plans. Two separate structures are being put in place – a trio of domestic bond issues and, in parallel, a 144a/RegS issue. Local issuance could occur via subsidiaries Surtigas and Gases de Occidente – Surtidora de Gas del Caribe’s filing for up to COP200bn to issue bonds of 2-20 years maturity is part of that potential package. Promigas would target 10-plus years in local markets and a maximum of 10 years in international markets. Corficolombiana is expected to lead the deal, rated AAA on a national scale. Promigas is hoping for a second investment grade rating before issuing. In May, its CFO Aquiles Mercado Gonzalez told LatinFinance Colombia’s second-largest gas pipeline operator was in dialogue with banks for a possible international deal this year. He highlighted peer Transportadora de Gas Internacional’s (TGI) $750m 10NC5 bond success in March as a reference point for his company. TGI saw $5bn in orders before pricing the 2022s at par with a 5.70% coupon to yield UST+342.6bp. Promigas sold bonds in the domestic market in August 2009, raising COP400bn at various maturities, via Bancolombia.
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Due to the Labor Day holiday in the US, this is the last Daily Brief until Tuesday, September 4.
US Manufacturer Agrees to Chile Buy
Cleveland, Ohio-based Eaton Corporation is poised to acquire Chile’s Rolec Comercial e Industrial, subject to closing conditions, the company says. Rolec is a 73-year-old family business with 630 employees, according to a source familiar with the business. It makes integrated power assemblies and switchgear, with products used in Chile and Peru for mining and other industrial applications. Eaton, meanwhile, cites Rolec’s relationships as valuable to its growing business in Chile and Peru in sectors such as mining, pulp and paper, and energy infrastructure. “We are excited to add Rolec’s capabilities to our expanding operations in South America,” says Rich Stinson, president, Power Distribution for Eaton’s Electrical Americas Region, in a statement. Eaton had 2011 sales of $16.0bn.
Vale Heard Awarding Mandate
Brazil’s Vale is heard awarding a mandate for a potential $1bn 10-year international bond transaction, according to a source familiar with the borrower’s plans. An official announcement has yet to be made, but JPMorgan, Citi, Bradesco, Banco do Brasil and Santander are thought to be top contenders for the business. Last month, Vale came through with a EUR750m ($949m) deal in a move that allowed it to diversify its investor pool and price inside its dollar curve. The 2023 bond priced at 99.608, with a 3.75% coupon, to yield 3.798%, or MS+180bp. BNP Paribas, Credit Agricole, HSBC, Natixis managed the sale. Vale is rated Baa2/BBB+/A minus.
YPF Preps Non-Deal RS, Local Debt
Argentina’s YPF is planning a non-deal roadshow in September as it seeks to test investor appetite ahead of what it hopes could result in a bond transaction as soon as the first quarter of 2013, according to its new CEO Miguel Galuccio. He declined to provide further details, in a conference call with reporters on Thursday. Meanwhile, the state-controlled oil and gas company will launch a local bond sale next week in a multiple tranche domestic transaction. Faced with large capex needs, YPF has indicated it plans to sell up to ARP3.5bn ($760m) in domestic bonds. YPF also plans to ask for approval to expand its debt program by $2bn, it says, and will put the matter to a shareholder vote September 13. The authorization would come in addition to the $1bn for which it is already authorized.
Aruba Preps Fixed-Income Meetings
The government of Aruba will meet fixed-income investors next week in Europe and the US, in a possibly prelude to a $253m, 11-year senior unsecured bond issue. Meetings will begin in London on September 3, followed by New York on September 4, Boston on September 5 and possibly Los Angeles on September 6. Fitch assigns the bonds a BBB rating with stable outlook. Proceeds will be used to address $88m in external maturities and to cover budgetary requirements, Fitch says. Credit Suisse and UBS are managing. Aruba last visited the bond market in February 2008, pricing a $57.3m 5-year issue.
Sodimac Sells Bonds
Sodimac has sold COP300bn ($164m) in Colombia’s domestic market, in an issue that saw some 2.8x demand. The home improvement unit of Chilean retailer Falabella sold COP40bn in 5-year bonds at IPC+3.48%, COP190bn in 10-year bonds at IPC+3.88% and COP70bn in 5-year bonds at 6.47%. Bancolombia and Correval are managing the deal, rated AAA on a local scale.