Category: Argentina

Steelmaker ArcelorMittal has offered $542m for the 34.7% it does not already own of Acindar Industria Argentina de Aceros, with ARS5.75 per share in cash for shareholders. The purchase will help support Acindar’s $150m investment program to raise capacity to 1.7m metric tons. JPMorgan is the arranger and dealer manager and Bruchou, Fernandez Madero & Lombardi are advising ArcelorMittal.

Argentine power distribution company Edenor has priced a $220m issue of 10-year NC5 notes at par to yield 10.5%. The deal was raised from $200m in size and came in line with 10.5% area talk. The price on the B2/B bond issue is similar to recent junk issues from Senda (B+) and Durango (B+), though wider than the 9.250%-9.375% floated by Edenor in July, when the transaction was suspended because of poor market conditions. The firm was originally planning to raise $220m. Citi and Deutsche have joint books.

Argentine metals company Industrias Metalurgicas Perscarmona is planning a seven-year 144a debt offering to raise funds to refinance existing debt. The size and coupon of the offering have yet to be decided, but is expected to be around $250m, according to a banker familiar with the deal. Sole bookrunner Merrill Lynch plans to price the bonds, rated B by Fitch, next week following a roadshow this week. IMPSA and KUO are part of a regional high yield bond supply wave that started last week and has some weeks to run. “The taps are back on. This is going to be a busy October,” says a veteran DCM banker with mandates to execute.

Argentine power distribution company Edenor will today look to price $200m in 10-year NC5 notes in the 10.5% area. Guidance on the B2/B bond issue is similar to recent junk issues from Senda (B+) and Durango (B+), though wider than the 9.250%-9.375% floated by Edenor in July, when the transaction was suspended because of poor market conditions. The offer size is also reduced from the originally planned $220m, though executives close to the deal say the company was able to repurchase some of its outstanding debt in the meantime, reducing its financing need. Citi and Deutsche have joint books.

According to Argentine press, Beatriz Paglieri, the person in charge of the CPI at INDEC, will be removed from her position. Although she had been seen as responsible for altering CPI data, analysts do not expect significant change for the better. “The removal of Paglieri from INDEC, if it materializes, would be mostly an indication that the government is trying to give in to the market,” says Credit Suisse. “[It] would not mean that the alleged intervention in the CPI data would cease altogether, at least in the near term, in our view,” the shop adds. “The decision should not be considered, in our view, as a first step toward more transparency in INDEC, although alleged manipulation of inflation has become a liability for the government,” says Merrill Lynch. Merrill expects the spread between “true” and “reported” inflation to contract in 2008, from 900bp-1,000bp (18% “true” versus 9% “real” inflation) to closer to 600bp-700bp in 2008 as reported inflation rises to roughly 12%.

Regulatory risk is a concern for the Argentine power sector, according to Fitch, which sees minimal private investment in the industry, an aging generation and transmission infrastructure and electricity supply unable to meet increasing growth in demand. “Regulatory risk is by far the largest concern for electric company credit ratings,” says Fitch. “In general, however, most companies used the period of high liquidity in the capital markets during 2006 and the first half of 2007 to reduce credit risk by refinancing their debt,” it adds. Fitch compares the sector now to the early 1990s in Argentina and says that consistent with the continued expansion of the economy, annual investment needs are estimated at $1bn. Manipulation of electricity resources to avoid power shortages will not stop the need for eventual rationing, the agency adds. “There seems little likelihood that existing capacity will approach the levels required by the expected growth in demand over the medium to long term,” says Fitch. “As a healthy energy sector is fundamental to sustaining Argentina’s long-term economic growth, a significant tariff increase for utilities, combined with the elimination of a cap on energy prices, is vital to encouraging private investment in the sector,” it concludes.

Venezuela has launched the sale of $1.2bn equivalent in new Bonos del Sur at a price of 108. The notes combine $600m in Argentine Boden 7% dollar bonds due 2015 with $600m in 7.125%Venezuelan TICC dollar-linked bonds due 2015. They can be stripped after pricing and traded separately. The government will use proceeds to pay down debt coming due this year and recoup funds used to buy the Argentine bonds last month. The sale comes after Venezuela canceled a larger August sale due to global markets turmoil. The bonds are marketed to local investors, satisfying demand for foreign currency. They should help to reduce the gap between the official and black market VEB rates.

Venezuela plans to start selling $1.2bn in Bonos del Sur Monday. The notes combine $600m in Argentine Boden 7% dollar bonds due 2015 with $600m in 7.125%Venezuelan TICC dollar-linked bonds due 2015. The bonds can be stripped after pricing and traded separately. The government will use proceeds to pay down debt coming due this year and recoup funds used to buy the Argentine bonds last month. The sale comes after Venezuela canceled a larger August sale due to global markets turmoil. The bonds are marketed to local investors, satisfying demand for foreign currency. They should help to reduce the gap between the official and black market VEB rates.

Venezuela plans to start selling $1.2bn in Bonos del Sur Monday. The notes combine $600m in Argentine Boden 7% dollar bonds due 2015 with $600m in 7.125%Venezuelan TICC dollar-linked bonds due 2015. The bonds can be stripped after pricing and traded separately. The government will use proceeds to pay down debt coming due this year and recoup funds used to buy the Argentine bonds last month. The sale comes after Venezuela canceled a larger August sale due to global markets turmoil. The bonds are marketed to local investors, satisfying demand for foreign currency. They should help to reduce the gap between the official and black market VEB rates.

Compania Financiera Argentina, part of the AIG group, has secured a ARP150m 18-month syndicated loan from a syndicate led by HSBC’s local unit. Banco Itau and Citi took senior tickets and Santander Rio was a participant. The deal priced over the Badlar rate and amortizes in five pieces, according to the borrower.