Fitch has downgraded the ratings of Brazilian industrial conglomerate Camargo Correa to BB minus from BB after the company announced it had purchased a 22% share in Cimpor for EUR961m. The outlook was revised to stable from negative. “The downgrade reflects the leveraging effect this transaction will have on Camargo’s credit protection measures, which were already weak for the rating category on a net debt basis,” Fitch says. Camargo’s net debt is expected to increase to BRL10.1bn from BRL 7.7.bn on a pro forma basis. Its pro forma net leverage ratio would climb to 3.5x from 2.7x. However, Fitch says the deal allows Camargo to increase its presence in global cement, and it should result in synergies with Camargo’s highly correlated core cement, engineering and construction businesses.
Category: Daily Brief
Ecuador Gets CAF Credit
Multilateral CAF has approved $200m in loans to Ecuador. Out of the total sum, $100m will be a loan to improve the country’s drinking water services and sewage system. The other $100m will be a revolving credit line to Ecuador’s development bank, Corporacion Financiera Nacional, that will help it assist the productive sector.
Colombia Infrastructure Fund Eyes First Close
Fintra, a private equity fund that will invest in Colombian transportation infrastructure, is expected to make its first closing of $150m this month, company spokesman Andres Marulanda confirms. He adds that investors are local. The fund, which is 70% controlled by Washington DC-based Darby Overseas and 30% controlled by Mercantil Colpatria, expects to make a second closing 12 months from now, Marulanda adds. He explains that potential investments are already being evaluated and that they should begin in Q1. The fund managers are Bogota-based Jorge Castellanos, who was previously banks superintendent and president of Bancafe, as well as Rick Frank of Darby.
Pinera Puts Clinic Stake on Block
Bancard Inversiones, an investment vehicle controlled by Chile’s president elect Sebastian Pinera, will auction the 9.7% stake, or 792,338 shares, it holds in Clinica Las Condes on February 16, for a minimum price of CLP24,000, confirms a source with knowledge of the deal. LarrainVial will handle the auction. The shares closed at CLP25,000 on the day of the announcement, bringing the total value of the stake to $36m. Pinera is also seeking to divest his 26% stake in LAN Airlines before he becomes president on March 11.
CapGold Buys Smaller Mexico Miner
US-based Capital Gold has acquired Canada’s Nayarit Gold in a share swap worth $41m. The move has puzzled mining analysts who cover Capital Gold stocks. “I think they paid an expensive price for a puny asset,” says equities strategist Christopher Ecclestone at Hallgarten. “Nayarit’s resource is small and does nothing to move Capital Gold towards its goal of production of over 100,000 ounces per annum in the short term,” he adds. Adam Graf, director of equity research at New York shop Dahlman Rose, also questions why Capital would buy a much smaller miner instead of a peer with similar assets. He adds that the latter abound in northern Mexico, where both seller and buyer operate. Company information shows that while Capital Gold has inferred gold resources of 157,000 ounces, Nayarit only has 19,000. Nayarit does however have inferred silver resources of 552,894 ounces, while Capital Gold has none. Investors also appear to have questioned the deal, as the companies’ stock prices dropped on the day of the announcement, with Capital down about 0.4% and Nayarit’s off almost 4.0%. Capital Gold president John Brownlie was not available to comment on the criticism of the deal. However, earlier in the day he did tell LatinFinance that after the purchase is completed, the company will seek more acquisition opportunities in northern Mexico. Jennings Capital is Capital Gold’s financial advisor. Nayarit’s legal counsel is Peterson Law in Canada and Kavinoky Cook in the US.
Ausol Extends Restructuring Offer
Autopsitas del Sol has extended its debt exchange offer to March 3 from February 10, and notes it has received acceptance from holders of $98m, or 31.9% of its total $306m debt. The toll-road operator is looking to extend maturities in the restructuring, offering holders of 3.50% of 2014 bonds (which step up to 5.0% this year) and holders of 11.5% of 2017 bonds the choice of new 2015 peso denominated floating-rate bonds, new 2020 step-up notes, both in a par exchange, or $400 cash for $1,000 principal. Accepting holders choosing new bonds then also have the additional option of exchanging new notes obtained at par for new 2017 bonds at a 10% discount. Barclays is managing the process.
Pemex Revisits Swiss Investors
Pemex has continued its multi-market fundraising push with a reopening of its 3.5% of 2014 Swiss franc bonds for CHF150m. The notes originally sold in October were reopened at 101.751 to yield 3.086%, or mid-swaps plus 160bp. The transaction was heard driven by reverse inquiry from Swiss accounts. It priced about flat to secondary levels and the Mexican state-owned oil producer’s dollar curve, says a banker on the trade. Credit Suisse managed the deal. The original CHF350m sale priced to yield 3.525%, or mid-swaps plus 185bp. Pemex has raised $1bn from the dollar markets and MXP15bn from the local markets in the last month.
Mexico Focuses on MXP Benchmark Liquidity
Mexico’s government hopes to broaden its investor base with a new domestic debt sale mechanism designed to foster liquidity in new peso benchmarks. “It’s a good opportunity to promote the local markets domestically and abroad,” Gerardo Rodriguez, Mexico’s deputy undersecretary for public credit, tells LatinFinance. Mexico will place the debt in a similar fashion to its external bonds, ensuring critical mass at the outset that also make the bonds eligible for fixed income indices. Mexico is targeting the week of February 22 for the first sale. The debt syndication, as the process is known, will have its first test with a sale of 8% coupon 2020 bonds, which Rodriguez says should come at a size of MXP15bn-MXP25bn. In Q2, the 2020 will return to be sold through the normal method of smaller auctions, he says. A 30-year government bond should be sold via syndication in March. The plan is for the system to apply to all benchmarks, he says, though 20 and 40-year domestic bonds are not planned for this year. Mexico has named Santander, JPMorgan, Bank of America Merrill Lynch and BBVA Bancomer as managers, with Banamex, ING and HSBC co-managers. Under the current system of smaller regular auctions, the government says it takes about 4-6 months for domestic bonds to reach the MXP15bn-MXP20bn considered adequate for good secondary liquidity. Debt syndication is used in several European countries, including Spain, Italy and the UK.
Vale CFO Mulls Bond/Loan Combo
Vale is likely to come to the capital markets to raise funds following a series of acquisitions totaling $5.6bn. CFO Fabio Barbosa tells LatinFinance that Vale enjoys an array of available options to help it finance the purchases, including cashflow, existing credit lines with development banks and export agencies, as well as the bond and loan markets. “We will explore potential market opportunities,” Barbosa says, referring chiefly to the bond market, but adding bank loans will also be considered. “We’ll do whatever is most interesting for the company,” he adds. The CFO acknowledges that the bond market appears to be accommodating at the moment. Barbosa says Vale has a proven track record of generating strong cashflow, and company reported an $11bn Q4 cash position. Such sizable liquidity may help make the case for a syndicated loan, which is prepayable. In 2008, Vale signed a $5bn credit agreement with Nexi and JBIC and obtained access to a BRL7.3bn line from the BNDES for its 2008-2012 capex program. Investment banks and lenders are heard aggressively pitching the company for a combination of bonds and loans. Vale, which has an average maturity of 9 years on its debt, almost all of which is in dollars, is focused on constantly extending tenor and lowering average cost of capital. Its leverage stands at 2.5x. In between early January and last week, Vale announced acquisitions of stakes in Fosfertil and entities that hold stakes in the fertilizer operation, worth up $5.6bn.
Codelco Board Gets Revamp
Chile’s outgoing president Michelle Bachelet has named a new board of directors at state-owned copper producer Codelco. The new board, to be chaired by current board member Nicolas Majiluf, will take office March 1. It will be responsible for choosing a CEO to succeed Jose Pablo Arellano, who has said he will not continue beyond March. The board includes former national budget director Alberto Arenas, former Codelco CEO Marcos Lima, Andres Sanfuentes and Marcos Buchi. Arenas, Sanfuentes and Majiluf will be on the board until May 11 this year, while Lima and Buchi will remain there until May 2011.