Brazilian sugar, ethanol and bioenergy producer Raizen is planning to launch a $450m, 3-year term loan within the next month, say sources familiar with the energy company’s plans. A date for the bank meeting has not yet been announced. Led by Citi and HSBC, the facility will raise funds for refinancing existing debt. Raizen is a joint venture between Cosan and Royal Dutch Shell.
Yearly Archives: 2012
Posted inDaily Brief
ECM Awaits Santander Mexico IPO
Santander Mexico is hoping recent supportive signs in the equity markets translate into a successful IPO, when it prices the highly-anticipated MXP49.01bn-MXP56.61bn ($3.72bn-$4.30bn) deal this evening. The well-regarded bank is heard with a book multiple times oversubscribed, with both bankers and investors citing strong equity funds flows last week following European Central Bank and US fed announcements as a positive sign. The close of a $5.17bn tender for shares of Brazil’s Redecard could also mean excess funds looking for reapplication to LatAm financial stocks. As with all equity deals, though, investors say it will come down to price. “The market is ready and people will be receptive. This could be expensive, but Mexico is expensive,” says a London-based EM portfolio manager looking at the deal. Most investors see a pickup to Banorte, the closest publicly-traded comparable, with Banorte trading at 12x 2013 price/earnings and Santander seen offering 10x-11.5x at the price range it gave at launch. “Given the interest, they can price at the top of the range. It is a good banking franchise, but we like to see a margin of safety,” Maclovio Pina, senior equity analyst at Morningstar, tells LatinFinance. His shop finds fair value at MXP29.00 per share, at the low end of the MXP29.00-MXP33.50 price range, a valuation hinging on the bank’s ability to control its main cost pillars while its balance sheet expands going forward. Valuing the bank at more than $17bn, Santander will offer 1.69bn secondary shares, including a 15% greenshoe. The deal is divided into an international tranche of up to 1.18bn shares in the form of ADRs, representing 80% of the total transaction, and a Mexican portion made up of 294m shares. Bankers away from and on the deal say the region’s new issue markets need a well-bid sale pricing at the midpoint or higher followed by strong aftermarket performance to have a hope of opening up the market wider for other new deals. However, even a very succ
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Global Bank to Reattempt Covered Bond
Panama’s Global Bank is heard starting investor calls for a covered bond offering as it targets a $200m sale as soon as Thursday, with the tenor still to be determined. The sale, a revival of a previous attempt in May, would be the first issue of a covered bond in Latin America. The transaction is being led by Deutsche Bank and HSBC. Backed by a cover pool of residential mortgages denominated in USD and located in Panama, the sale received a Baa3/BBB minus rating, above Global Bank’s Ba1/BB+ default rating. In May, the lender had been looking at a $200m 5-year bond at a 5.00-5.25% yield.
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Inbursa Nears MXP Issue
Inbursa plans to issue up to MXP5bn ($387m) in the Mexican domestic bond market, according to sources familiar with the transaction. The 3-year bond is heard likely to price at TIIE+23bp-25bp. The AAA-rated issuer had been aiming for an issue this week but is likely to push it off until October 4 as it awaits authorizations. Inbursa, Banamex, Banorte-Ixe and Activner are managing. Inbursa last issued in May, selling a floating-rate note paying the TIIE+25bp.
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Itau Completes Redecard Tender
Itau has completed a tender offer to acquire all outstanding shares of Redecard, it says, allowing the Brazilian bank to delist the payment processor at a cost of BRL10.46bn ($5.17bn). Itau is buying up 299.0m shares at BRL35.00 per share, receiving about 90% participation. Prior to the process Itau held slightly more than 50% of Redecard. The buyback concludes a process initiated in February, with minority investors including Lazard Asset Management unsuccessfully fighting the valuation along the way. The bank plans to pay the tender offer with its own cash. Redecard went public in a 2007 IPO.
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Petrobras Returns to Europe
Petrobras has raised more than $3.3bn-equivalent during its second visit to the European and Sterling bond markets. Diversifying funding sources away from USD as it addresses $235bn in capex needs, the Brazilian state-controlled oil producer was seen pricing at levels for the most part competitive to its EUR, GBP and dollar curves. A EUR1.3bn ($1.68bn) 2019 tranche priced at 99.398 with a 3.250% coupon to yield 3.357%, or mid-swaps plus 212.5bp, the tight end of 215bp (+/- 2.5bp) guidance. A EUR700m 2023 tranche priced at 98.154 with a 4.250% coupon to yield 4.466%, or mid-swaps plus 257.5bp, the tight end of 260bp (+/- 2.5bp) guidance. In the sterling market, Petrobras priced a GBP450m ($730m) 2029 bond at 97.472 with a 5.375% coupon to yield 5.610%, or Gilts+320bp, the tight end of 320bp-330bp guidance. Bankers on the deal calculated flat to five basis points concession for all three tranches to their repective curves. “Petrobras’ Euro 10-year looked roughly flat to their USD curve before swap charges – so a solid outcome in terms of relative pricing versus USD and diversification of funding,” notes a LatAm DCM banker away from the deal. While seen as tight to the EUR and GBP curves, there was less consensus on attractiveness versus the USD. “Petrobras got great pricing versus Euros and Sterling and would like to have priced flatter to the dollar curve given the basis swap relationship. But the outcome was still very successful,” says another banker. “The deal is fair and not cheap enough to encourage dollar-based investors to make a switch for a handful of basis points because of the lack of liquidity of EUR and GBP,” says a London-based portfolio manager following the deal. Demand was heard to be roughly EUR3.8bn for the 2019, EUR2.4bn for the 2013 and more than GBP900m for the Sterling portion. Bankers note the issuer is keen not to saturate the dollar market, and transaction took advantage of European investors hungry for Euro-denominated fixed-income transact
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S&P Negative on Bahamas
S&P has revised the outlook on the Bahamas’ BBB rating to negative from stable, it says, based on a deteriorating fiscal profile. The agency sees a government fiscal deficit of about 6.7% of GDP for the fiscal year ending June 2013. It cites a low tax revenue base, and the unlikelihood of any significant reform to increase revenue. It also sees a rise in net general debt to 45%-47% of GDP in 2013-2014 from 41% in 2012. Failure to address the debt and the deficit issues could lead to a rating downgrade.
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Telecom Details Local Debt
Companhia de Telecomunicacoes do Brasil Central, known as Algar Telecom, is preparing to raise BRL220m ($108m) in the domestic bond market, it says. A 2017 tranche pays the DI plus up to 1.5%, and a 2029 inflation-linked tranche pays up to 6.6%. The exact portion of each is to be determined during bookbuilding, and the sale may be upsized by as much as BRL77m. Algar is raising funds to repay debt and for working capital. Banco Votorantim, Itau and Santander are managing the sale. Part of the Algar Group, Algar Telecom offers telephone, cellular, cable television and data service in six Brazilian states.
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Debt Funds Book Inflows
EM debt funds booked net inflows of $1.26bn during the week ended September 19, according to EPFR. In terms of performance, the asset class was up 0.01% for the week ended September 20, for a year-to-date gain of 13.64%, according to Lipper. Global income funds gained 0.02% during the week, and are up 6.83% ytd. International income funds fell 0.09% during the week, for a 6.86% gain ytd.
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Localiza Nears Debenture Return
Brazilian rental car company Localiza plans to raise BRL300m ($149m) in domestic bonds, it says. A 2019 bond is expected to pay DI+0.95%, and amortize beginning in year four. Caixa and Banco do Brasil are managing the sale, done under the rule 476 restricted format. Localiza is rated AA+/Aa1. Earlier this year, Localiza tapped the debenture market for BRL500m.