Just a day after announcing the BRL510m ($286m) acquisition of Uniban, Anhanguera Educacional Partipacoes says it plans to borrow BRL400m in the Brazilian domestic bond market. The secondary education company is looking to sell a 2018 bond paying the DI+1.95%, amortizing twice yearly beginning 2015. Itau is managing the sale, to be done under the Rule 476 restricted format. Previous local bond issuance and a December BRL734m equity follow-on have helped fill Anhanguera’s acquisition war chest thus far, But the Uniban purchase agreed this week – taking out one of the few big university players left – was larger than its typical sub-BRL100m buys and may require some replenishment of funds. The issuer also has a BRL200m bond maturity next year. S&P has placed Anhanguera’s BB global rating on negative watch until it can assess the implications of the Uniban buy. This comes less than a month after an upgrade to BB from BB minus.
Category: Daily Brief
BNDES Approves BRL3bn Vivo Financing
Brazilian development bank BNDES has approved a BRL3bn ($1.7bn) loan for Telefonica’s Vivo. BNDES officials decline to specify the interest rate or tenor. The Brazilian unit of the Spanish telecom is set to use proceeds for infrastructure and technology development and research and development. Vivo is also set to invest BRL22m in social programs.
CFE Gives Fixed-Rate Guidance
Mexico’s Comision Federal de Electricidad (CFE) is out with price talk of MBonos+125bp-135bp for the retap of its fixed rate 2020 bonds, according to market participants. The state-owned electricity provider is reopening for the second time a domestic floating rate 2014 and fixed-rate 2020 bonds, with pricing expected Wednesday. Price talk of TIIE +20-25bp emerged earlier in the week for the floating-rate portion. The total size of the transaction will be up to MXP7bn ($528m). CFE is raising the funds for general corporate purposes. Banamex, and BBVA Bancomer and ING are managing the sale, rated AAA on a national scale.
Anhanguera Goes Large in Uniban Buy
Brazilian secondary education company Anhanguera Educacional Partipacoes has agreed to acquire peer Uniban for BRL510m ($286m), a larger-than-usual acquisition that allows it to pick up what analysts call one of the last large university players. The BRL382.6m paid for operations and BRL128m for three real estate assets is “slightly expensive,” Itau says, but notes the “scale, strategic fit and synergies justify the price.” Anhanguera bid about BRL6,900 per student for the 55,000 students the deal adds, an analyst at another shop says, a slight premium considering most deals in the sector come at BRL6,000 per student. It is not a surprising amount, though, as transactions in the past have gone as high as BRL8,000, he adds. The size of the transaction is up from its typical sub-BRL100m buy that Anhanguera and its peers engage in frequently as they drive to consolidate the country’s secondary education sector. “Consolidation is a major driver in the sector, and we continue to see Anhanguera as among the best positioned to come out on top, based on its superior, replicable model, its scale and its track record of acquisitions,” Itau says. With the deal, Anhanguera adds nine campuses in Sao Paulo and three others in states in the southern region. Analysts say the move makes Anhanguera the clear leader in Sao Paulo, though the university space still remains fragmented. Additionally, the buy allows the educator to execute on synergies including distance learning, which Uniban is authorized to implement, according to a company investor call Monday. It also indicated that it expects to slow its acquisition process for the next few months while it integrates Uniban and other deals it has executed over the past nine months. Anhanguera will pay BRL235m at closing and BRL285m within 24 months. It has been funding its acquisitions with proceeds from a BRL734m equity follow-on done in late 2010. The company declined to comment on any financial advisors used in the transaction.
Banco Occidente Readies COP Bond
Colombia’s Banco de Occidente plans to sell domestic bonds Thursday, according to a banker managing the sale. The banker does not give the exact amount, though the issuance comes under a COP1trn ($545m) program and is likely to be in the range of COP300bn-400bn. The unit of Grupo Aval will be able to choose from 3-year bonds paying a fixed rate or a spread to the IBR rate, 5-year bonds paying a fixed rate or a spread to inflation, 7-year bonds paying a spread to inflation, and 10-year bonds paying a spread to inflation. Corficolombiana is managing the sale, rated AAA on a national scale.
BBVA Colombia Sells Local Bond
BBVA Colombia has sold COP353bn ($192m) in domestic subordinated bonds, upsizing the transaction by COP53bn. A COP95bn 2018 tranche pays IPC+4.28%, a COP106bn 10-year tranche pays IPC+4.45%, and a COP152bn 15-year portion pays IPC+4.60%. BBVA led the deal, rated AAA on a national scale. Titularizadora Colombiana is set to follow Wednesday with a COP278bn RMBS offer, and Banco Occidente is expected Thursday.
Canadian Miner Adds Mexican Project
Canadian gold producer Agnico-Eagle agreed to buy Mexico’s Grayd Resources in a deal valued at approximately CAD275m ($277m). The project is about 70km from Agnico-Eagle’s existing Pinos Altos operation, and could produce 92,000 ounces for nine years, says an analyst. David West, an analyst with Salman Partners, notes that the company, which is paying CAD 2.80 per share, a 65.7% premium to the average price for the 20-day period ending September 16, is in part paying for the exploration potential, making it hard to say at this point if the deal is fair value. “You’re paying for the exploration potential,” he says. “I think at the end of the day, you’re going to find that Agnico realized a good value in this acquisition,” he adds, highlighting the amenable mining location Mexico provides. He said he expects Mexico to remain a top area for mining activity. “It’s one of the better areas, period.” Agnico-Eagle retained TD Securities as its financial advisor, and Grayd was advised by Canaccord Genuity, and law firm Cassels Brock & Blackwell.
CFE Eyes MXP Issuance
Mexico’s Comision Federal de Electricidad (CFE) is indicating pricing of TIIE +20-25bp for its retap of 2014 bonds, according to market participants. The state-owned electricity provider is reopening for the second time the domestic floating rate 2014 and fixed rate 2020 bonds, with pricing expected as soon as today or Wednesday. It does not yet indicate the amount. It originally sold the 2014 notes with a MXP5bn ($380m) size and the 2020s for another MXP9bn in December before reopening in January for MXP4bn each. The 2014 is a floating rate bond paying the TIIE plus 26bp, and was reopened in January at 100.338. The 2020 pays a fixed 7.96% coupon and was retapped at 97.808. CFE is raising the funds for general corporate purposes. Banamex, BBVA Bancomer and Ixe are managing the sale, rated AAA on a national scale.
CMPC Sees Demand Despite Tough Conditions
Bankers are expressing surprise at how well CMPC’s $600m 5-year loan package has been progressing despite tough market conditions and relatively tight pricing. “It looks like the Chilean market has its own demand. CMPC is developing a [decent] level of interest,” says one banker. It is thought that banks are keen to participate in what is a partial refinancing for a credit that is an infrequent issuer in the loan market. Another banker notes how well pricing has held up for Chilean names in comparison to other LatAm borrowers. How long this situation will last is open to debate, but some bankers believe that the country’s borrowers will eventually face more expensive pricing. “Cost of funding in the dollar market is high and international banks are limited by this,” says another banker. The pulp and paper company is offering Libor+65bp on a $400m 5-year term loan and Libor+70bp on a $200m 5-year revolver, which also offers a 20bp utilization fee on top of the base margin if over half is drawn. The revolver has a shelf life of 3 years and both tranches start amortizing in month 42. Banks will get 45bp for MLA tickets of $50m, and 30bp for lead manager tickets of $25m. Bank of America Merrill Lynch, Bank of Tokyo Mitsubishi, EDC, JPMorgan and Scotia are leading.
Edenor Sells Distributor Positions
Argentine power distributor Edenor has agreed to sell its controlling stakes in power distributors Edesal and Edelar, raising $47m. Argentine construction company Rovella Carranza will buy a 78.4% stake in Edesal for $26.7m. Andes Energia is set to pay $20.3m for a 78.4% piece of Edelar. In addition, the buyers will repay or acquire some loans, extended by Edenor to Edesal and Edelar. Edesal and Edelar operate in the provinces of San Luis and La Rioja, respectively.