CSN has borrowed BRL1bn from Caixa Economica Federal through a bank credit transaction known as a CCB. Funds obtained from the 3-year deal under the government-owned bank’s Credito Especial Empresa program will be used for liability management. It obtained BRL2bn through a similar 3-year deal from CEF in August to obtain working capital. The Brazilian steelmaker is currently undergoing a public tender process for the outstanding shares of Portuguese cement maker Cimpor.
Category: Daily Brief
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Peru Securitizer Sets Debut RMBS
Titulizadora Peruana is targeting Feburary 15 for its first ever mortgage-backed security offering, according to its finance director. The securitization specialist owned by Colombiana has been pitching the deal worth up to $35m to local investors. The 20-year paper, backed by mortgages from BCP and Interbank, has an average life of 9 years and will pay fixed rate. The bond is dollar-denominated to match the currency of the loans. Subordinated bonds will represent about 6% of the issuance. BCP’s Credibolsa unit and Inteligo are placement agents for the deal, rated AAA on a national scale.
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Abengoa Advances Syndication
Abengoa, which is raising a $460m 7-year loan for a 300MW co-gen power plant in the Mexican state of Tabasco, is heard to have clinched the funds through a limited syndication. The deal was launched in November and moved slowly because of a need for technical and engineering analysis, say executives on it, who expect closing by the beginning of April. The facility pays a step-up spread starting at Libor plus 412bp for the 36-month construction period, and rising to 437bp through month 48, 462bp through month 60, and 562bp through month 78. Fees are 325bp. Some 10 banks have been invited to participate. Only lead Santander, and BES and Banobras, which fully underwrote the facility when a club of banks supporting it initially fell apart last year, have been confirmed. The co-gen facility counts on offtake from Pemex. The $460m represents 70% of the project costs and a remaining $200m will come in the form of equity from Abengoa. Santander and BES have committed a $40m bridge to Abengoa that will be taken out with proceeds from the syndication.
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Gafisa Revives Equity Issue
Brazil homebuilder Gafisa says it plans to issue BRL900m-BRL1bn of equity in the coming weeks. The move follows a substantial recovery in Gafisa’s stock price since it withdrew plans to place around BRL700m in equity last June. The company’s announcement last year prompted a selloff of more than 10% of the stock price, which in turn led Gafisa to scrap plans to issue. Since mid-June, however, Gafisa shares have risen more than 50%, making an attractive issuance point for the homebuilder. Proceeds are earmarked for land acquisitions, M&A, new launches, working capital and investments in existing projects, says Gafisa in its prospectus. Itau BBA and JPMorgan are leading the offering, whose prospectus does not detail a precise timeline. In Q4 2009, Gafisa approved a plan to issue BRL600m in 2014 local debentures via Caixa Economica Federal. But the issue was never printed, according to the CVM.
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Brazilian Builder Plans Local Float
Mills, a Rio-based concrete structure and engineering specialist, aims to capitalize on interest in Brazilian construction through a Bovespa IPO. In a prospectus filed late Tuesday with the CVM, Mills says it is targeting gross proceeds of BRL525m. The funds are to be used for strategic acquisitions and equipment purchases, says Mills. The company produces heavy concrete structures and provides specialized construction services to large developers including Odebrecht, Camargo Correa, Andrade Gutierrez, OAS and Queiroz Galvao. In real estate, the country’s top homebuilders like Gafisa, Cyrela are also among its clients. Milks says timing is good for the infrastructure and construction sectors in Brazil, noting heightened demand for the government’s low income housing plan, as well as preparations for the World Cup and Olympic Games. Net revenue from rose 35% year-on-year to BRL404m in 2009, while ROE stood at 40% in 2009, versus 28% in 2008, according to company data. Ebitda margins stood at 52% in 2009, up from 45% in the previous year. BTG Pactual, Itau BBA and Goldman Sachs are leading the deal.
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Chile Hotel Chain Eyes Acquisition
Chilean hotel and casino operator Enjoy says it has agreed to acquire a 70% stake in peer Salguero Hotels for $130m. A spokeswoman declines to state how the company plans to finance the acquisition or if there were any financial advisors involved. According to company information, in July Enjoy did a capital increase of CLP23bn ($42m). In September, it got a loan from Banco Security for UF550,000 ($21m). Enjoy says the acquisition is subject to due diligence. It adds that Salguero, which operates a casino with 200 slot machines and 13 game tables, will open a hotel by the end of this year. Salguero’s expansion plan calls for developing a casino with 1,200 slot machines, 40 game tables, 200 bingo positions, a 5-star hotel with 120 rooms and a convention center.
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Vene Devaluation Not Enough: Fitch
Fitch says the Venezuelan government’s decision to devalue the Bolivar will not be enough to address high inflation, expected to average 31% in 2010, in the absence of measures on the fiscal and monetary front. The country also needs a radical improvement in the business environment to address structural components of inflation. The agency warns that Venezuela could turn into a net sovereign external debtor as early as 2010 if the government issues USD-denominated debt in the local market. It is doing so to mop up liquidity temporarily, and manage depreciating pressures on the parallel exchange rate. Fitch adds that this also transfers “excess international reserves” from the central bank to the National Development Fund. Venezuela should maintain higher liquidity levels to support creditworthiness, as dependence on oil revenue causes more balance of payments volatility relative to other peers, says the agency. “Venezuela’s creditworthiness could improve if a sustainable and coherent policy response were implemented to reduce its vulnerability to oil price fluctuations and macroeconomic volatility,” Fitch says. Venezuela is rated B+ with a stable outlook.
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Buy Mexico Equities: Citi
Citi has upgraded its recommendation on Mexican equity to overweight from neutral, arguing that valuations make for an attractive entry point. The MSCI Mexico is down 11% from its 2010 high. At 14.1x forward earnings, 6.6x 2010 Ebitda and 2.4x P/BV, the country’s equities are the region’s least expensive, argues the shop. Other drivers include the expectation that US GDP will grow 2.9% in 2010, a relatively low chance the MXP will devalue substantially, if at all, and the central bank’s likely hesitation on tightening rates. Citi calls for a year-end 2010 Bolsa level of 35,000, providing an estimated total return of 17%. The IPC closed at 30,649 up 0.1% Monday. Among Mexican names investors should look at buying are America Movil, Soriana, Coke-Femsa, Geo, Grupo Mexico, Grupo Alfa and Compartamos. Citi also cut Chile to underweight from neutral, on account of that equity index’s 17% run up since December. Generally speaking, Citi says conditions suggest the formation of a regional equity bull market. It pins this on rising global growth, improved earnings, and a gradual withdrawal of liquidity by central banks globally and the accompanying slow rise in the cost of capital.
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ISA Brasil Unit Launches $354m Buyback
ISA Capital do Brasil, the holdco for its 89% ownership in Sao Paulo electricity transmission utility CTEEP, has launched an offer to buyback all of the outstanding $354m of its 8.8% 2017 bonds, it says. Holders have until March 8 to agree to swap the bonds for $1,082.50 per $1,000.00 principal, or $1,117.50 per $1,000.00 before February 24. It is also asking holders at the same to waive a set of covenants on the bond issue. HSBC is managing the process. ISA Capital plans to fund the buyback through issuance in Brazil’s domestic markets. The bonds were originally sold in January 2007, as part of a 2-tranche sale through ABN and JPMorgan that also included $200m in 7.875% 2012 bonds.
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OECD “Ready for Brazil”
Brazil is a good candidate for OECD membership and Colombia may also make the grade, secretary general Angel Gurria tells LatinFinance. “It depends on Brazil. We are ready to start the process anytime Brazil is ready,” says Gurria. He declines to speculate on timing. The OECD has been inviting Brazil since 2007 to join an enhanced engagement process with a view to possible membership. The former Mexican finance minister says the outlook for Brazil is stable, and he does not expect a change of president to be a market event. “There’s much less uncertainty,” says Gurria. “There’s also in Brazil a culture of stability now, and certainly a culture of avoiding big deficits and inflation. When you have been there, you don’t want to go back.” Meanwhile, Colombia is in the OECD’s development center and a potential member of the international economic organization. “Colombia has a lot of conditions that would allow it to be an interesting and important candidate,” says Gurria. Mexico and Chile are the only OECD members from LatAm, following the latter’s accession in January.