BNP Paribas will this year exit Panama through the sale of its bank there, a senior official at the French institution confirms. “We are in the process of closing the sale of the branch,” says the banker. “We hope [it will be sold] in the first half of the year,” he adds. BNP was late last year rumored to be selling down a significant loan portfolio in the country, but the official says that the books involved in the sale are not large. Most of the clients were apparently mid-market and domestic. The decision is related to the OECD’s inclusion of Panama on a grey list of countries that have not fully implemented global tax standards.
Category: Daily Brief
Posted inDaily Brief
Colombia Shoots for H1 Dollar Bond
Colombia aims to raise before June the $500m it needs to borrow internationally under this year’s plan, the finance ministry’s external markets director Patricia Moreno says in a conference call with investors. The sovereign was able to complete 80% of its 2010 borrowing through 2009 pre-funding. Moreno says the government would like to complete the remainder by June, as this is an election year. “We will consider a reopening of an outstanding bond if the market is there, or a new issuance,” she says. Moreno does not give a more specific indication of timing, explaining that the government will monitor the markets for the right window. In addition to $500m from international markets, the government requires this year $1.7bn from multilaterals, and will also raise COP13trn ($6.56bn) from auctions of domestic TES bonds.
Posted inDaily Brief
Banco de Bogota Plans Bond Issues
Banco de Bogota says it plans to issue up to COP1.5trn ($760m) in local bonds this year to finance working capital. CFO Maria Luisa Rojas tells LatinFinance that a first issue of up to COP300bn will be made in February. Banco de Bogota itself will manage the sale. Banco de Bogota, Colombia’s second largest bank in terms of assets, is part of Grupo Aval.
Posted inDaily Brief
Equity Issuers Ebb and Flow
The second and third weeks of January have seen a slew of new equity filings for IPOs and follow-ons (FO), as well as updates to filings made in the final weeks of December. The flow, which until last week included 5 IPOs and 4 follow-ons, is indicative of a strong conviction on the part of issuers, say bankers. However, as of Thursday, 2 companies planning follow-ons appeared poised to pull out. Metalfrio, the commercial refrigerator and freezer maker, was heard close to pulling plans to raise around BRL370m in a follow-on scheduled for January 28. Bankers away from the deal suggest investor interest may be cool, though there is also the possibility of parallel M&A discussions. Metalfrio, which hired Credit Suisse, Itau and Morgan Stanley to lead the FO, has not filed a statement on plans to alter the course of the deal, scheduled to price January 28. M. Dias Branco meanwhile filed a statement saying its controlling shareholder, whose shares account for most of the planned secondary offer, suspended the sale, scheduled for February 4. It cites market conditions and timing as the reason. The Bovespa dropped around 4% last week to 66,220 and is down around the same amount since the start of the year after spending some of January above 70,000. Executives close to the process say the move is based on a decision to issue at a better multiple after having further grown the company during the first part of 2010. M. Dias Branco is looking to achieve a Novo Mercado listing by October 2010 and will likely return to market by then, say executives close to the process. Itau BBA and BofA-Merrill were slated to lead.
Posted inDaily Brief
Minerva Prices Tight Despite Rough Market
Despite tough global markets conditions, Minerva has raised $250m in 2020 NC5 bonds through the first single B Brazil deal of 2010. The meatpacker priced late Friday the B/B3 bond at 98.131 with a 10.875% coupon to yield 11.200%, toward the tight end of 11.25% area guidance. The new bond was heard trading around reoffer in the gray late Friday, according to investors. It was likely helped by recent tightening in the outstanding 2017 through 10.00%, investors say, even as much of the market moved the other way. “Given that the market has been trading off and initial guidance was higher, this priced tighter than expected,” says Juan Cruz, head of Latin America corporate credit research at Barclays. “This is not a credit without risk, so for them to price at this level is positive,” he adds. Proceeds are earmarked for refinancing 2010 and 2011 maturities, as the issuer looks to reshape a challenging financial profile that includes 7.7x total debt/Ebitda, the highest of its peers, according to Barclays. Goldman Sachs and Banco do Brasil managed the sale. Minerva’s previous dollar bond was a $150m 9.5% of 2017 sold in January 2007 via Credit Suisse, Santander and Bradesco. It was reopened the following month for $50m. It remains unclear whether the global selloff deters other Latin high-yield issuers in the pipeline, including Marfrig and Vanguarda from the Brazil food sector.
Posted inDaily Brief
Brazil Creates Petrochemicals Force
In a well-telegraphed final step in the consolidation of Brazilian petrochemicals, Braskem, Petrobras and Unipar have announced terms on a deal that gives the former control of LatAm’s single largest collection of assets in the sector. The deal, valued at BRL870m in equity plus BRL6.69bn in assumed debt, involves not just Braskem’s purchase of Unipar’s stake in Quattor. It also creates a “new” Braskem that will consolidate ownership of the assets with funds from Petrobras and Braskem’s leading shareholder Odebrecht. In chronological order, the steps to capitalize Braskem include: creation of a holdco called BRK owning 93% of Braskem’s voting shares; direct equity injections into BRK by Petrobras and Odebrecht totaling BRL3.5bn, of which BRL2.5bn comes from the latter and the remainder from the former. This will leave Braskem with control of 54% of BRK and Petrobras with 46%. There will also be a private rights offering to Braskem shareholders worth up to BRL5.0bn, whereby BRL3.5bn will be accounted for by BRK. Once that is done, Braskem will get Unipar’s 60% stake in Quattor for BRL647m. It will also purchase BNDESPar’s holdings in Quattor for BRL170m. Lastly, Braskem will pay another BRL53m for 2 of Unipar’s holdings in Polibutenos and Unipar Comercial. Braskem will pay Unipar in at least 3 installments: BRL50m by February 18; another BRL50m by March 4, and the remaining BRL547m within 5 days after regulatory approval. Quattor’s net debt totals BRL6.69bn, which Braskem will also assume.
Posted inDaily Brief
Braskem Eyes Bonds for Quattor Refi
Following last week’s acquisition, Braskem is considering reprofiling Quattor’s debt with a dollar bond issue later this year, CFO Carlos Fadigas tells LatinFinance. Braskem has a leverage ratio of 2.7x and its debt load, including dollar-denominated bonds and loans, has an average maturity of close to 7 years. By contrast, Unipar debt is exclusively held by local banks, with no bonds or debentures, and a leverage ratio of over 10x prior to acquisition, says Fadigas. Braskem is buying, along with other assets, Unipar’s 60% stake in Quattor for BRL870m and assuming BRL6.7bn in net debt. Added to Braskem’s obligations, the merged company’s net debt is BRL13.2bn says Fadigas. Estimated Ebitda is around BRL3bn, leaving the combined entity with a leverage ratio of 2.7x-3.0x. This assumes Braskem raises BRL4bn-BRL5bn in an upcoming capitalization from existing shareholders, including Petrobras and Odebrecht. The pair committed BRL3.5bn and minority holders may purchase up to an additional BRL1.5bn in Braskem stock. The equity capital raising process is likely to take up to 90 days, says the CFO. Fadigas says Braskem’s outstanding 10-year notes are trading to yield close to 6.6%, which he sees as attractive and a good target for a new bond. Still, he notes, with over BRL8bn in cash following the capitalizations, the combined entity will have plenty of breathing room to meet its obligations without issuing bonds. Moody’s affirmed Braskem’s Ba1 rating and stable outlook Friday, noting that the acquisition of Quattor is accretive. Moody’s spots initial leverage of the combined entity at 3.2x, dropping to 3.0x this year. Fadigas says Braskem plans to meet Quattor’s Brazilian lenders – many of them the same as Braskem’s banks, including Banco do Brasil and Bradesco – to discuss a debt re-profiling. For the acquisition, Braskem used Morgan Stanley and Bradesco BBI. Unipar hired Estater and Petrobras hired BTG Pactual.
Posted inDaily Brief
London Pacific Buys Into Brazil Healthcare
LP Healthcare Group (LPHC), a joint venture between US-based investment firms London Pacific and Incite Financial, have agreed to acquire Brazil’s Santos Administracao e Participacoes for $50m cash. Santos is a healthcare system that owns an HMO and a 57% stake in 3 hospitals and 3 clinics. The HMO has 125,000 beneficiaries, London Pacific senior MD Michael Low tells LatinFinance. London Pacific owns 30% of LPHC and Incite the remaining 70%. Closing of the acquisition is expected in Q1. LPHC intends to keep Santos’ current management in place. Santos, founded 53 years ago, generated approximately $173m in revenue and $23m in Ebitdar for the year ended December 31, says LPHC. Low also says this deal, which was privately negotiated, is his firm’s first foray into LatAm and that while there are no concrete plans to expand in the region yet, LPHC will look at any opportunities that may arise.
Posted inDaily Brief
Barclays Changes BRL Forecasts
Barclays says that in light of the recent surprisingly rapid deterioration of fundamental support, and the potential for election pressure, it has changed its USD/BRL forecasts to BRL1.75 in 1 month (previously BRL1.70), BRL1.80 in 3 months (previously BRL1.70), 1.90 in 6 months (previously BRL1.75). It keeps its 12-month forecast unchanged at BRL1.75. The shop adds that December’s employment report reinforces the notion that growth is set to moderate in the coming months. Meanwhile, it says, the current account surprised in December with an almost $6.0bn deficit (versus the $3.6bn deficit expected by consensus), which should be repeated in January. Barclays thinks the current account deficit will rise to around $50bn-$70bn in 2010-11 versus $36bn or so in 2009.
Posted inDaily Brief
Moody’s Positive on Coca-Cola Femsa
Moody’s has changed the outlook for Coca-Cola Femsa (KOF) to positive from stable, citing the Mexican company’s ample free cash flow generation, solid performance and debt reduction efforts over the past several quarters despite very challenging economic conditions. For 2010, Moody’s expects KOF to maintain free cashflow close to recent levels of around MXP5bn to MXP6bn (when normalized for working capital), which should allow for further de-leveraging. In 2008, Venezuela accounted for 18% of KOF’s revenues and 9% of its operating income. As of September 30, KOF reported gross debt of MXP15.7bn, down MXP2.9bn or 16% from year-end 2008. Net debt was MXP6.7bn, down by nearly half since year-end 2008. Moody’s adds that devaluation of the official Venezuelan exchange rate to 4.30 from 2.15 VEF/USD will not materially affect KOF’s credit metrics given Venezuela’s limited contribution to cash generation. Moody’s expects that KOF will continue to grow earnings and generate ample free cashflow in 2010 despite a still-challenged consumer, allowing it to further reduce debt and improve credit metrics.