Santander’s Brazilian unit has filed for a US and Brazilian IPO. The bank has initially stated it aims to raise up to $200m, though it has not indicated the number of shares to be sold. The bank has previously said it aims to sell 15% of the unit, and buyside estimates on size range from BRL4bn-BRL6bn. The issuer has not indicated the timing of the offering. Santander plans to sell units, which each represent 55 common shares and 50 preferred shares, according to the regulatory filing, and will trade on the Sao Paulo stock exchange under the symbol SANB11.SA. The bank says it will use proceeds to expand both its capital base and physical presence in Brazil. It specifies that 70% will go to new branches and ATMs, 20% to improving its funding structure and 10% to increasing its capital base. Santander and Credit Suisse are global coordinators and joint bookrunners, with Bank of America-Merrill Lynch and UBS as joint bookrunners.
Category: Daily Brief
Cemex Plots Equity Sale
Cemex has approved the issue up to 1.6bn CPO shares through either a public share offer or via a sale of convertible bonds. The troubled Mexican cement maker is raising capital to comply with the terms of its recent $15bn restructuring, in which it faces higher spreads if it does not raise $1bn in equity by June 2010. Cemex does not state how much it expects to raise, but a sale of 1.6bn CPOs would raise just over $2bn, at Monday’s closing price of MXP17.08. The company does not indicate who would manage the sale or when it would take place. In August, Cemex finalized a workout that terms out shorter maturities to 2014. The interest on the new debt of Libor plus 450bp can increase if Cemex does not meet a strict debt repayment schedule. This includes raising $1bn in equity by next June to meet 2010 amortizations of more than $2.2bn if it hopes to avoid a $100m fine and a 75bp margin increase. Equity desks with an array of financing options have aggressively pitched Cemex, say bankers close to the issuer. Citi and Santander are among two of the company’s leading lenders, and they appear best positioned to gain lead roles on an upcoming issue.
Debt Issuers Aim to Test Investors
Sovereigns and corporates lining up to extend the summer debt issuance deluge into this month will try to squeeze price, but cash-rich investors say they are selective. “High-grade sovereigns don’t need to give much way, but high-yield corporates still have to be generous,” says said Edwin Gutierrez, who manages about $5bn in EM debt at Aberdeen Asset Management in London. “There is enough cash on the sidelines. The pipeline is open again as long as deals are priced fairly,” he tells LatinFinance. Deal flow this year has been characterized by benchmark size 10-year – or 5-year for high-yield – bonds sold at juicy concessions, but now some of the stronger credits may be able to push for better terms. On the sovereign side, Colombia plans to raise up to $1bn more this year, possibly with a 30-year bond. El Salvador is heard ready with an 5-10-year issue of up to $800m, and the Dominican Republic is tipped to follow, bankers and investors say, likely after squaring away a $1.5bn IMF standby. Opportunists Brazil and Mexico are not to be ruled out either. Brazilian steelmaker CSN begins a roadshow today supporting a $750m 2019 offering, and could be followed by compatriot Grupo Votorantim, heard looking at a $500m issue through HSBC and Citi. Other corporates expected in the fall include ISA, Cemig, Mexichem, Banco do Brasil, Bradesco and CPFL. Investors expect a continued increase in lower-rated issuance, which began in July. “The second tier still has to pay up. That is where the money is going to be made,” says a New York-based EM investor.
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Haiti Gets WB Grant
The World Bank has approved a $22m grant for Haiti to help it expand access to primary education, and improving the performance of public primary schools, as well as strengthening the capacity, transparency, and accountability of the ministry of education and vocational training.
Celfin and Goldman Sachs Join Forces
Chile’s Celfin Capital and Goldman Sachs have joined forces to sell derivatives to institutional investors in Chile, Jorge Errazuriz, Celfin’s vice chairman, tells LatinFinance. He explains that the derivatives market is still in an early stage of development in Chile, but sees great potential as AFPs, the local pension funds, have around $105bn available to invest.
IDB Financing Argentina Tech Development
The IDB has approved a $100m credit line for Argentina, to help it finance its technological innovation program. This is the first of 3 operations totaling $750m, the multilateral says. The other 2 operations would come into effect in 2011 and 2013. The first credit line was approved for a 25-year period, with a 5-year grace period, and a Libor-based interest rate.
Investors Yank Cash from LatAm Equity
In the week ended September 2, investors pulled $185m out of LatAm equity funds amid a broader exodus from stocks, says EPFR Global. Investors withdrew $713m from diversified global emerging markets equity, while committing $80m and $67m respectively to EMEA and Asia ex-Japan equity funds, it adds. The fund tracker notes that the buyside generally steered the cash pulled out of money market funds into fixed income rather than equity. “With the summer holiday season winding down, investors started looking ahead and trying to match current valuations to future prospects. In many cases they struggled to make the connection between equity markets at 10 to 12 month highs and a global economy that has digested the bulk of the fiscal stimulus packages served up in recent months but continues to shed jobs,” says EPFR. Meanwhile EM bond funds investing in riskier local currency debt attracted the bulk of new fixed income money, at $247m for the week.
JBS Able to Buy Pilgrim’s: Fitch
While Brazil’s JBS says “there is no transaction or firm commitment” to buy US-based Pilgrim’s Pride, it is perfectly able to do so without affecting its credit profile or ratings, says Fitch analyst Jose Luis Villanueva, who rates the company B+. He explains that JBS could easily pay for the target, rumored to be worth $2.5bn, using proceeds from the IPO it plans to do for its Colorado-based US subsidiary. The company filed with the SEC to raise up to $2bn in July. JPMorgan and Bank of America Merrill Lynch are the lead underwriters on the deal.
LatAm-Focused Miner Looks North
US-based miner Solitario Exploration, whose operations are entirely in LatAm, has acquired fellow miner Metallic Ventures, based in Canada, for $46.9m, of which $15.5m in cash and $31.4m in shares. The deal will allow Solitario, with precious and base metal assets in Peru, Mexico and Brazil, to expand operations to the state of Nevada, where gold-miner Metallic’s assets are located. GMP Securities is the target’s advisor. Solitario does not disclose advisors.