Airport operator Lima Airport Partners (LAP) is to issue $165m in bonds to refinance existing bank debt. The senior secured amortizing discount fixed-rate notes have been assigned a BBB minus rating from S&P, above that of the sovereign’s BB+ rating. The investment-grade rating reflects the good asset quality of Jorge Chavez International Airport in Lima, and the experience of its German operator, Fraport AG, said S&P. Jorge Chavez handles 98% of international air traffic to Peru and 89% of cargo traffic, according to S&P. The ratings agency also noted that the LAP’s ownership structure will likely change in the near future. LAP is currently owned by Fraport (42.75%) and Alterra (57.25%). However, Alterra is to sell its stake in LAP to Fraport, which in turn will sell 39.99% to the International Finance Corp. (IFC), Fondo de Inversion en Infraestructura (Fondo), and possibly to other persons or entities. “As a result of these transactions, Fraport will own 60.01% of LAP, IFC 19.99%, Fondo 10.00%, and other persons or entities the remaining 10.00%”, said S&P.
Category: Daily Brief
MMX to Buy AVG for $224m
Brazilian mining and metals company MMX Mineração e Metálicos has agreed to buy 100% of local mining company AVG Mineração for $224m, the company said in a press release. AVG owns an iron-ore mine in Serra Azul, Minas Gerais, which produced around 1.6m tons of iron ore in 2006 and approximately 1m tons of iron ore in the first five months of 2007; the company estimates production may reach 2.5m tons of iron ore this calendar year. MMX said it expected the deal to close in around 60 days.
Pemex Eyes Domestic Bond Issue
Pemex has $1bn-$2bn in funding needs for this year, roughly half of which will come from export credit agencies (ECAs). It already has lines with Eximbank, JBIC and European ECAs. With pre-funding for 2008, the market target is around $1bn, which will be placed locally later in 2007, Pemex associate managing director of finance Mauricio Alazraki tells LatinFinance. “This will be done opportunistically. It’s not a necessity,” says Alazraki. “It could be a longer dated bond, 20 or 30 years,” he adds. “The whole curve is open.” Pemex is also considering fine tuning the dollar and euro curves, substituting illiquid bonds with larger more efficient issues. But pesos are the most attractive after the swap. “The market that’s cheapest is the local market. Certificados bursatiles, if you translate to dollars, it’s the cheapest funding source,” says Alazraki, who has extensive experience in all of the debt markets open to Latin issuers. “For the bulk of our funding needs in the future, the Mexican market is the main option. Probably, after that it would be the bank market,” he adds. (For more on this interview, see www.latinfinance.com).
Peru Raises Benchmark Rate to 4.75%
Peru’s central bank raised the benchmark interest rate 25bp to 4.75% in its monthly monetary policy committee meeting, which ended the evening of July 5. The hike, the first in 13 months, was apparently a preemptive move to curb rising expectations on inflation and keep it within its target range of 1%-3%. It caught some by surprise, though analysts generally agreed with the decision. “Although we did not expect a hike at this meeting, we were of the view that rate hikes were becoming imperative to protect the inflation target,” according to Goldman Sachs.
S&P Raises Guatemala Outlook
S&P has revised the outlook on its BB/BB+ (foreign-currency/local-currency) long-term ratings of Guatemala to positive from stable. The improvement reflects the country’s “growing prospects for policy continuity after the 2007 national elections, based upon a solidifying consensus on key economic policies”. S&P affirmed its BB long- and B short-term foreign currency sovereign credit ratings on the Republic of Guatemala and its BB+ long- and B short-term local currency sovereign credit ratings. According to S&P GDP growth this year is expected to reach its highest level in more than 10 years – at around 5%.
Swiss Banks Dominate LatAm ECM
UBS and Credit Suisse rank first and second in LatAm ECM underwriting, with $4.48bn and $3.83bn in volumes through July 6, according to Dealogic. UBS printed 25 deals, garnering 25.2% of the market, while Credit Suisse landed 18, with 21.5%. In third came JPMorgan, with eight deals and $2.37bn, followed by Merrill Lynch, with $1.87bn via nine deals. Citi came in fifth, with $1.67bn across seven offerings. Reflecting the importance of Brazilian flow in the overall ECM figures, Itaú BBA came in sixth in the region with $1.12bn across 10 offerings.
Telemar to Raise BRL11.45bn to Fund Buyback
Brazilian telco Telemar has been given the go-ahead by its board to raise around BRL11.45bn in the debt market ($6bn) to fund a share buyback program. The company is planning to issue around BRL4.8bn ($2.5bn) in local promissory notes as well as $6.65bn worth of overseas bonds. The buyback is part of the company’s restructuring plan, which the fixed-line telecoms operator has been putting in place since last year.
Brazil June Inflation Remains Level
Brazil’s rate of inflation, as measured by IPCA, remained unchanged in June at 0.28%, according to the national statistics agency IBGE, taking inflation for the 12 months through June to 3.7% from 3.2% in the 12 months through May. A rise in food prices in June was balanced by a fall in ethanol fuel. The benign inflationary environment should allow the Central Bank room for a further interest rate cut this month, say analysts.
Three Brazilians Ready Debentures
One agricultural company and two real estate developers have advanced onto the final stages of their planned issuances of Brazilian corporate bonds, according to SND, the Brazilian debentures system. Nova América Agroenergia plans to issue BRL300m ($158m) in 2013 amortizing local bonds at an expected margin of 90bp over the CDI interbank rate, via Unibanco. Company, the real estate developer, received approval for its third debenture issuance, of BRL75m in 2012 notes at 108% of the CDI, via Banco do Brasil. And Rossi Residencial pushed through with its debut debenture, a $300m issuance of 2014 bonds at 106.6% of the CDI. Bradesco BBI has books. Proceeds for all the offerings, slated for the coming weeks, are for capex and expansion.
Busy Week for Syndications
Despite the onset of the North American summer doldrums and the accompanying lull in new issuance, the LatAm bank market is busy this week, with a series financings heading for general syndication. On Monday, Nextel Brasil will host a bank meeting in New York, followed by another in São Paulo on Wednesday, for a $200m A/B loan that pays around 200bp over Libor, according to bankers away from the deal, via FMO and Standard Bank. Terms and MLAs are to be disclosed at the meetings. On Tuesday, Mexichem will launch to general syndication its $595m 5-year term loan, which pays Libor plus 87.5bp via Citi, with BofA and ABN AMRO as joint bookrunners. Also on Tuesday, Chile’s Empresa Nacional de Telecomunicaciones (Entel), has a meeting in Santiago for the $600m 7-year facility it is taking out to refinance a May 2005 loan of the same size that currently pays 42.5bp over Libor, according to sources away from the deal. The facility pays on a ratings grid that may step up in later years. Out of the box, at BBB+, it will pay 25bp over Libor. Citi and ABN AMRO are leading and Entel will hold a second meeting in New York on Thursday. Last week also brought the launch of Pemex’s repricing of two $1.25bn facilities that have maturities of three and five years, and margins of 27.5bp and around 40bp, according to sources away from the deal. BBVA, Calyon and Barclays are leading. Half of the total $2.5bn being raised will be new money, for which MLAs are currently being tapped.