Santander Mexico has launched its IPO, aiming to raise MXP49.01bn-MXP56.61bn ($3.72bn-$4.30bn), in a sale valuing the bank at more than $17bn, it says. The Mexican unit seen as one of the crown jewels of the troubled Spanish bank has set September 25 for the pricing of 1.69bn shares, including a 15% greenshoe, at MXP29.00-MXP33.50 each. 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. At the maximum, Santander would float 24.9% of Santander Mexico. Bankers away from and on the deal say the region’s near-term ECM hopes have a lot riding on the deal’s success, in that a well-bid sale pricing at the midpoint or higher followed by strong aftermarket performance could restore issuers’ and investors’ confidence in LatAm deals. Proceeds from the sale, set to be Mexico’s largest-ever IPO, will be used for general corporate purposes. Santander, UBS, Deutsche Bank and Bank of America Merrill Lynch are global coordinators. Itau has been added to the joint bookrunner tier since the initial filing, joining Barclays, Citi, Credit Suisse, Goldman Sachs, JPMorgan and RBC. Santander, Banamex, BBVA Bancomer and HSBC are on the domestic portion. In Mexico, Mexichem is set to follow with an up to $1bn-equivalent October follow-on, via Banamex, HSBC, JPMorgan and Morgan Stanley. Cemex is also in the pipeline with an IPO of its ex-Mexico LatAm businesses in Colombia, for perhaps $750m-$1bn. In Brazil, used car dealer AutoBrasil plans to try its luck in the IPO market.
Yearly Archives: 2012
Taesa Plans Local Debt
Taesa is preparing to issue up to BRL3.7bn ($1.81bn) in Brazil’s domestic bond market, it says. The transmission company plans BRL1.2bn in short-term debt and BRL2.5bn in debentures. The debenture sale may include a 2017 paying DI plus up to 1.0%, an inflation-linked 2020 paying a fixed rate set to the government NTN-B bond plus up to 1.55% and an inflation-linked 2024 paying a fixed rate set to the NTN-B plus up to 1.65%. The exact sizes and interest rates will be determined during bookbuilding. Proceeds are marked for refinancing existing debt. It does not name the manager of the sale, and does not respond to a request for comment.
Vale Raises Tight Long Funds
Vale has emerged with a tightly-priced $1.5bn 2042 bond, allowing the issuer to secure capex funds at attractive rates. The Baa2/BBB+/A minus transaction drew more than $4.5bn in demand. The new benchmark priced at 99.198 with a 5.625% to yield 5.625%, or UST+300bp, in line with 300bp-area guidance, that had come in from 310bp whispers. The bond was heard trading at 0.40-0.60 points in the grey late Tuesday. Vale’s 2039s were trading at UST+290bp pre-announcement, which bankers on the deal say is equal to 301bp on an interpolated basis, suggesting a pricing flat to the 2039. Despite the attractive levels, some questioned the timing of the transaction, given the widening of Vale’s bonds as of late, versus tighter levels earlier in the year. “If the company doesn’t need debt, why are they flooding the market with supply after bonds took a hit?” asks an EM investor following the transaction. Bankers on the deal note that while mining sector bonds have widened out in the secondary markets over the last couple of weeks, due to macroeconomic conditions and China’s slower growth, treasury rates are attractive enough to warrant the visit to the market and price a deal they describe as getting Vale’s lowest yield for a 30-year issuance. They also point to Vale’s strong capex needs, which the proceeds will help fund, along with contributing to general corporate purposes. Roughly 50% participation came from the US, 33% from Europe, 10% from LatAm and 7% from Asia. Fund managers took roughly 60% of the transaction, private banking 15%, and hedge funds 12%, with the rest allocated to insurance, pension funds and other investor types. JPMorgan, Citi, Bradesco, Banco do Brasil and Santander led the transaction, which follows Vale’s EUR750m ($949m) 2023 issuance last month. Last week, the miner agreed to sell 10 transport ships to Polaris Shipping, raising $600m.
Brazil’s Aliancse Preps Debentures
Brazil’s Aliancse Shopping Center has received board approval to issue BRL100m ($49m) in the local bond market, it says. Further details, including tenor and banks leading the transaction, were not immediately available. The company is raising funds in order to acquire and build new shopping centers and refurbish existing facilities as well as for general working capital purposes. It last priced a BRL185m debenture in March. The 2015 notes pay the DI+2.0%, in line with the ceiling it set, and amortize equally in years 4 and 5. Itau managed the sale, done under the rule 476 restricted format. In its most recent acquisition in January, Aliansce agreed to buy stakes in five malls for a total of BRL574.5m.
Credit Agricole Advances MXP Bond Plans
Credit Agricole is preparing to sell up to MXP2bn ($152m) in floating-rate bonds in Mexico’s domestic market. The four-year bonds will represent the second issuance from a MXP10bn program and will pay a spread to the TIIE benchmark. Pricing is expected in late September and proceeds are to be used for general corporate purposes. Banorte Ixe is managing the sale, done through Credit Agricole CIB’s Productos Financieros unit and guaranteed by Credit Agricole Corporate and Investment bank. Credit Agricole was last in the Mexican market in 2010, when it priced a 3-year floater at TIIE+30bp.
DCM Preps for Return
Issuers are lining up for a traditional early September rebound in DCM issuance, while bankers expect levels above Q2 – but less than this year’s frenetic Q1. Persistent appetite for EM credit, coupled with sustained low interest rates in developed markets and strong EM debt fund inflows, have continued to drive DCM issuance this year, poised to set another record. But whether lower-rated issuers can cash in on the DCM frenzy remains an open question as the year enters its final stretch. “I expect high- yield activity to increase in the second half. If we get increasing stability we will have even more,” Roberto D’Avola, head of LatAm DCM at JPMorgan, tells LatinFinance. “High yield has a lot of possibilities. Investors will want to get into these names, but they must be names that are showing an improvement in their credit profile.” Such sales accounted for about 22% of the volume so far this year. High-yield issuers are poised to pop up across the region, D’Avola says. The key lies in companies that exhibit the growth that accompanies good cash generation. He notes an increase in crossover investment, as well as more participation from LatAm-based investors. “These are high-growth companies and their markets are very under-penetrated. They don’t get the benefit of real leverage,” Eduardo Cruz, head of banking for Latin America at Citi, tells LatinFinance. High-yield candidates include Peruvian home improvement retailer Maestro. Issuers currently on the road include the government of Aruba and Banco de Credito e Inversiones (BCI) which are heard looking at a $253m11-year senior unsecured bond issue and a 2017 issue respectively. Other potential names in the market in September include Brazil’s Vale, which is heard awarding a mandate for a potential $1bn 10-year international bond transaction in early September and Chile’s Arauco which is rumored to have mandated two banks ahead of dollar transaction. Brazil’s Caixa Economica Federal is heard mandating Deutsche Bank
EM Debt Takes in Funds
EM debt funds booked net inflows of $455m during the week ended August 29, according to EPFR. In terms of performance, the asset class was down 0.02% for the week ended August 30, for a year-to-date gain of 11.69%, according to Lipper. Global income funds lost 0.07% during the week, and are up 5.49% ytd. International income funds dropped 0.27% during the week, for a 4.59% gain ytd.
LatAm Equity Sheds Funds
LatAm equity funds saw net outflows of $52m while EM equity funds saw net inflows of $634m during the week ended August 29, according to EPFR. In terms of performance, LatAm funds lost 2.01% during the week ended August 30, and are up 1.00% year-to-date, according to Lipper. EM funds fell 2.16% during the week, to bring them to a ytd gain of 5.51%. Global small and mid-cap funds fell 0.69% on the week, and have earned 8.63% ytd.
Masisa Plans Issue
Chile’s Masisa will issue up to UF2m ($94m) today, say sources with knowledge of the board products manufacturer’s plans. The company has been eyeing an issue that could have come as early as last Friday, but chose to hold off until the start of September, in a move that sources say could make the issue more compelling for large investors. Masisa can choose from a 5.00% 2017 bullet bond and a 5.30% 2033 note with a 10-year grace period. Proceeds would refinance existing debt. BCI and Scotia are leads on the deal, rated A minus on a local scale. Masisa is also understood to be looking next year to the international markets for additional refinancing.
Pine Starts Huaso Roadshow
Brazil’s Banco Pine is understood to be starting its roadshow for a so-called Huaso bond in Chile’s local bond market. The mid-size Brazilian lender has registered a UF6m ($282m) program of up to 10 years, sources say. Fitch assigns it an A minus national-scale rating. Pine’s program covers issuance in UF, CLP or USD, with proceeds supporting the bank’s growth. Pine has hired JPMorgan and Celfin to manage the process, according to people familiar with the plan, for which the issue date remains unclear. The company is looking to diversify its funding, says a person familiar with its plans, while Chilean investors with excess cash must look for investments outside of their market. In August, Mexico’s Corporacion Geo issued UF342,000 in the Chilean market, bringing the first Huaso sale since 2010, though at a smaller than expected size. Acting under a $100m-equivalent shelf and initially announcing UF0.5m, the Mexican homebuilder priced the 2020 at 91.40 with a 6.50% coupon, to yield 7.8%, or government paper plus 540bp. Proceeds will be used for refinancing short term debt. Santander managed the deal, rated BBB/BBB on a national scale. BTG Pactual has also been heard talking with investors about the possibility. Previously, only Mexico’s America Movil and Peru’s BCP have executed Huaso bonds, in which peso-denominated notes are issued domestically by foreign entities.