Chile’s central bank has held its interest rate again, in line with market expectations. The rate has been on hold since January 2012, when it lowered the benchmark by 25bp to its current 5.0% level. The bank cites ongoing uncertainty in Europe and also notes peso appreciation as other elements in the central bank’s considerations. Citi, in a note following the decision, highlighted the similarity of this month’s statement to last month’s, noting international market tensions easing but ongoing Eurozone questions. Citi suggests a hold for the next few months, but with an eye toward cutting versus raising when the time comes. “With the pressure on wages (and therefore non-tradable inflation) easing and the CLP strengthening further against the USD, we believe rate cuts remain a possibility. However, for this to materialize, further evidence that the pace of activity is moderating needs to take place,” the shop says.
Yearly Archives: 2012
Eike Backtracks on LLX Delist
Eike Batista has suspended a plan to delist his LLX Logistica port operator, EBX says in a statement. The billionaire had initially been looking at spending more than BRL600m ($297m) on the sale, offering up to BRL3.13 per share for all of the outstanding shares, when the idea was first proposed in July. However, an independent evaluation by Bank of America Merrill Lynch suggests BRL6.94-BRL7.63 would be fair. Ontario Teachers’ Pension Plan, the second-largest holder after EBX, had agreed to boost its stake in the company as part of the delisting offer. LLX closed Thursday at BRL3.13.
ENA Hits the Road
Panamanian toll-road operator Empresa Nacional de Autopista (ENA) is preparing fixed-income investor meetings starting next week. ENA plans to visit accounts in New York Monday and Tuesday, followed by Boston on Wednesday and the US West Coast on Thursday. In August last year ENA raised $395m through a 2025 bond yielding 5.75% and a 2019 priced to yield 5.25%. The deal was rated BBB/BBB minus. HSBC and Global Bank, managers of the previous sale, are coordinating meetings. Panama’s government, which owns ENA, had indicated later last year that a follow up to the first deal was possible and could target more than $650m.
Fitch Positive on Lima
Fitch has revised the outlook on the city of Lima’s BBB minus rating to positive from stable, it says. The move “reflects that despite an increase in debt burden, the strong fiscal position of [Lima] and high operating margins will still result in sound debt metrics comparable with other entities in the BBB category,” the agency says. Fitch notes that it is significant in terms of economics and taxes, but takes into account its investment plans, which are expected to be about 40% debt funded.
High-yield Debt Issuers Start to Line Up
With the US Fed’s QE3 decision out of the way and some well bid high-grade bond offerings in the books this month, LatAm’s expected high-yield pipeline is beginning to take shape. Peruvian home improvement retailer Maestro and Colombia Telecomunicaciones (Coltel) plan to meet investors ahead of new transactions, hoping to take advantage of demand for corporate paper from their two countries. Colombia Telecomunicaciones is considering a benchmark-size 2022 bond denominated in USD or Colombian pesos, according to sources familiar with the plans. Fitch notes a $750m expected size when assigning a BB rating. Coltel merged its fixed operations with Telefonica Moviles Colombia in June, and is 70% owned by Telefonica (BBB) and 30% by the Colombian government. The partial government ownership makes pricing tricky, but a banker familiar with the issuer’s plans sees a starting point at the Colombian sovereign as well as the Telefonica parent’s 10-year dollar bonds, quoted at a spread of UST+400bp Thursday. The roadshow starts in Bogota and Santiago today and visits accounts in London and Lima Monday, and Boston on Tuesday before wrapping up in New York and Los Angeles Wednesday. Credit Suisse, HSBC and JPMorgan are managing. Meanwhile, Peru’s Maestro is heard planning to raise $180m through a 7-year bond, according to Fitch, which assigns a BB minus rating. A 10-year tenor is also heard being considered, as the issuer seeks to address at least $100m in debt and fund $80m in capital expenditures. Intercorp Retail Trust’s (B1/BB minus) 2018 bond, trading to yield 6.56% Thursday, is considered a direct comp. Fixed-income investor meetings commence Monday in Los Angeles, followed by visits to accounts in Boston Tuesday, New York Wednesday, Lima Thursday and Santiago on Friday. It will then visit accounts in Zurich and Geneva the following Monday before wrapping up in London September 25. Bank of America Merrill Lynch and JPMorgan are managing the transaction
Milbank Adds LatAm Partner
Carlos Albarracin has joined law firm Milbank as a partner in its global securities practice specializing in LatAm capital markets, Milbank says. The Argentine comes from Chadbourne & Park, where he was also a partner. He will be based in New York and is expected to devote substantial time to the firm’s Mexico practice.
Mining CEO Resigns
David Beatty has resigned from his position as CEO of Brazil-focused Canadian gold company Rio Novo Gold, Rio Novo says. He leaves to return to investment banking-related work, and is replaced by Julio Carvalho, president of the company and of Rio Novo’s Brazilian legal entity Rio Novo Mineracao. Carvalho has worked as president, CEO and a member of the board of directors of Peak Gold, executive vice president of South and Central America of Goldcorp, president and CEO of Mineracao Onca Puma and CFO and executive director for Rio Tinto Brasil.
Moody’s Raises Ecuador
Citing solid sources of funding and a track record of payments since a 2008 default, Moody’s has raised Ecuador’s credit rating to Caa1 from Caa2. The agency sees economic and fiscal indicators that compare favorably to medians for Ecuador’s sovereign peers, most of whom are B rated, as well as new external funding from China and other sources. Moody’s also notes Ecuador’s highly external creditor base and oil sector dependence among current challenges. The outlook is stable.
Puma Nears Close
Puma Energy, a subsidiary of commodity trader Trafigura, is heard looking at a closing by the end of the month for its $330m 5-year syndicated loan. The funds will be used to pay for the acquisition of gas stations and storage facilities in Central America and the Caribbean from Exxon completed earlier this year. Citi is leading the deal.
Still Seeking a Buyer, Cruzeiro Extends Buyback
The credit guarantee fund administering a tender for Brazil’s Banco Cruzeiro do Sul extended its deadline by one day, it says, and is expected to make an announcement about the fate of the bank today. The Fundo Garantidor de Credito’s (FGC) offer to buy back $1.58bn of the mid-size Brazilian bank’s debt needs 90% acceptance from creditors – it was short of this mark as of the August 28 deadline – and it must find a buyer for the troubled bank. The tender had hit 75% as of the early deadline, suggesting the 90% threshold could have been reached by Thursday’s final deadline. Finding a buyer is perhaps less certain, with rumors flowing in the local press regarding which large Brazilian bank – the buyer must have at least BRL2.5bn ($1.24bn) in assets and able to inject some BRL800m into Cruzeiro – might be interested. The tender launched in August offers about 49% of face value on six seires of dollar bonds. The FGC is offering $560 cash per $1,000 principal for the bank’s 8.00% 2012 bonds. It is also offering $510 per $1,000 for its 7.00% 2013, 7.625% 2014 and 8.50% 2015 and 8.250% 2016 bonds. Holders of the 8.875% subordinated bonds receive $260 per $1,000. Those that accepted before a September 5 early deadline receive an extra $50 per $1,000. Bank of America Merrill Lynch and HSBC are managing the tender. Brazil’s central bank seized Cruzeiro in June after finding “unsubstantiated asset items.” The bank has been under the temporary administration of the FGC during the fraud investigation.