Mexico’s Grupo Famsa is preparing to issue up to MXP1bn in floating rate bonds domestically. The 2012 notes will price at a spread to the TIIE benchmark. The transaction, which counts on a guarantee from Nacional Financiera, is expected September 11, according to bankers managing it. The retailer will use proceeds for working capital. Ixe is managing the transaction, rated A on a national scale.
Category: Daily Brief
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JBS Denies Interest in Pilgrim’s Pride
Brazilian beef company JBS is denying press reports that indicate it is interested in acquiring US-based Pilgrim’s Pride, the poultry producer that filed for Chapter 11 bankruptcy last year. “It’s speculation. We are always looking at opportunities, and we see good opportunities for the future, but there is no deal in process with Pilgrim’s Pride,” says a JBS spokesman Wednesday. The Wall Street Journal reports that JBS will announce as soon as next week the acquisition of Texas-based Pilgrim’s Pride, for a price north of $2bn. It does not name any sources. Pilgrim’s Pride’s shares jumped 5.1% Wednesday to close at $5.15. The company has a $381.4m market cap. JBS shares jumped 1.7%, closing at BRL7.73.
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Cetip Set for BRL2bn+ IPO
Brazilian securities clearing house and depository Cetip has filed for an IPO on the Bovespa, following widespread speculation about a jumbo offer. It does not disclose the volume or timing of the sale, though a stake of about 40% is expected to be sold to raise BRL2bn-BRL3bn, according to a banker close to the sale. The deal is expected soon after regulatory approval, since 2Q financials go stale at the end of the month. Cetip has hired Itau BBA, UBS Pactual, Bradesco, Santander and Credit Suisse to lead the operation. Cetip is 70% owned by its member financial institutions, and 30% by private equity fund Advent International, which acquired the stake in March for $171m. Even if it only generates BRL2bn, the equity transaction would be the region’s second largest of the year, after VisaNet’s BRL8.24bn blowout offer in June. Cetip demutualized 2 years ago and considered a number of options including an IPO, but ended up shelving the plan due to global crisis.
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CSN Goes Back on Tour
Brazil’s Companhia Siderurgica Nacional (CSN) plans to begin a roadshow in London Tuesday in support of a benchmark-sized bond issue. The rating agencies expect a 10-year bond of up to $750m, they say in reports assigning BB+ (S&P), BBB minus (Fitch) and Ba1 (Moody’s) ratings to the deal. The split-rated steelmaker will travel to New York September 10, Boston September 11 and finish in LA September 14. Itau and Morgan Stanley are managing the 144a/Reg S CSN transaction, done through the Islands XI special purpose vehicle created for the issue. CSN’s 2015 are trading to yield 5.75%-6.00% range says an investor, while a more liquid 2017 from fellow Ba1/BBB minus Brazilian steelmaker Gerdau traded in the low 6%s Tuesday. CSN’s last cross-border bond was a $750m 9.5% NC5 perpetual sold in July 2005 through Credit Suisse and Deutsche Bank. It nixed a 30-year late in 2006. CSN aims to be among the first Brazilian corporates out of the gate in what should be a busy fall issuance spree. Likely issuers include Banco do Brasil, Grupo Votorantim and Cemig. Juicy yields characterized the frothy June through August market, marked by hefty oversubscription and sharp aftermarket rallies. The big question for borrowers and their bankers is how far they can squeeze price. “There should be some overall spread compression, but it’s difficult to say how much,” says a New York-based DCM banker, noting that yield will depend on individual borrowers.
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BR Malls’ Outlook Stable: S&P
S&P has revised the outlook of BR Malls’ BB minus rating to stable from negative after the Brazilian shopping mall company had a BRL445m capital injection. S&P says the injection will help finance the company’s aggressive expansion program and reduce requirements of new debt. It also reflects its expectation that credit metrics will improve in 2010 with incremental cash flows.
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T&T Seen Cutting Rates Further
Trinidad & Tobago’s central bank recently cut its repo rate by 50bp to 6.75% in reaction to a drop in inflation, which is down at 5.9% in July from a peak of 15.4% in October, and a slowdown in domestic demand. JPMorgan expects the bank, which has reduced the rate by 200bp since March, to continue easing, amid decelerating inflation and a weak domestic economy. The shop forecasts GDP will shrink 1.0% this year. The next repo rate announcement will be on September 25.
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S&P Upgrades Cablemas on Televisa Stake
S&P has raised Cablemas’ long-term corporate credit and senior unsecured debt ratings to BB+ (stable) from BB to reflect Televisa’s increased participation, evidenced by an additional capital contribution of MXP557m that increased its interest in the capital stock to 58.3% from 54.5%. “Cablemas represents a strategic asset to Televisa because the company is the second-largest cable operator in Mexico (as measured by number of subscribers),” says S&P credit analyst Fabiola Ortiz. S&P says Televisa’s investment in Cablemas is in line with its strategy to enter the telecom sector in which it is already a shareholder of 2 Mexican cable companies, Cablevision and Television Internacional. In November 2006, Televisa invested $258m in long-term notes convertible into 99.99% of the equity of Alvafig, the holding company of a 49% interest in the voting stock of Cablemas. In February 2008, Televisa invested an additional $100m to boost its interest in Cablemas to 54.5%. During Q1 2009, Alvafig made a capital contribution of MXP557m to Cablemas in exchange for convertible limited voting shares, increasing its interest in the capital stock to 58.3% from 54.5% and maintaining a 49% of the voting stock in Cablemas, notes S&P.
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Grupo Mexico Closer to Taking Asarco
Grupo Mexico is moving closer to taking copper miner Asarco as a bankruptcy judge says its offer is better than that of India-based Sterlite Industries. It is now up to a federal district court judge in Brownsville, Texas to make the final decision, expected by the end of November. Grupo Mexico’s plan will contribute $2.2bn in cash to Asarco’s debtors, provide a $280m promissory note, a $200m working capital facility to fund Asarco’s operations after bankruptcy, and a release of Grupo Mexico’s claims against Asarco. Sterlite had offered $2.1bn. An equities analyst at Mexico’s Ixe Grupo Financiero says that because Grupo Mexico is offering to pay cash, it should prevail over Sterlite. However, he explains that the workers’ union’s preference for Sterlite’s bid could tip the scale in the Indian company’s favor. Ixe is keeping its buy recommendation on Grupo Mexico, which closed Tuesday up 13.85% at MXP22.03.
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Argentina Leads LatAm Equity Push
Argentine equities performed the best among emerging markets of LatAm in August, says Bank of America-Merrill Lynch. It adds that the MSCI Argentina Index rose 12.8% in August, significantly outperforming the regional index, which gained 1.9% during the same month. The best performing sector was financials, while the worst performing sector was energy. In comparison, the MSCI Peru Index rose 4.7% in August, the MSCI Mexico Index jumped 5.0%, the MSCI Brazil Index firmed 1.5% and the MSCI Chile Index declined 4.5%.
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Pernambuco State Gets BNDES Help
The state of Pernambuco in Brazil is getting a BRL276m loan from BNDES to offset a decrease in revenues. The financing has a 9% interest rate, a maximum repayment period of 8 years and a 1-year grace period.