Category: Bonds

The Global Yield Fund of New York-based private equity firm GEM has agreed to invest up to BRL120m to acquire shares of Brazil’s Laep Investments via a private placement, the latter says in a regulatory filing with Brazil’s securities commission, without specifying how many shares this could entail. GEM’s fund also has the option to acquire an additional 30m shares at BRL3.00 per share. Proceeds will be used to strengthen Laep’s working capital. Laep has a market cap of BRL409m and 162,431 outstanding shares, according to Economatica. Laep shares closed at BRL2.52 Monday. Bermuda-registered Laep controls Brazilian companies Lacteos do Brasil and holds shares in Parmalat Brasil, PRLT, Integralat – Integracao Agropecuaria, Integralat – Integracao Agro-Negocios, In Vitro do Brasil, Companhia de Alimentos Gloria, Companhia de Alimentos Ibituruna, and Mayoria. GEM has $3.4bn in assets under management.

Standard Chartered has hired Rodrigo Gonzalez, a former Dresdner origination banker, as a director in charge of DCM for LatAm, extending a substantial buildup in its LatAm fixed income business. Gonzalez transferred with Dresdner to Sao Paulo in early 2008 and most recently assisted Commerzbank in its attempt to divest the Dresdner Brazil unit it acquired later that year. Gonzalez will report to Steve Aloupis, head of capital markets for the Americas, in charge of loans, syndications and DCM. Aloupis says Brazil will be an important focus for the burgeoning DCM group. It should enjoy the support of a lending and syndications platform that has historically had a particularly strong track record in financial institutions coverage, as well as trade finance and correspondent banking. Loan market coverage will expand to support DCM origination, say StanChart executives. Following the arrival from Lehman last year of Mohammed Grimeh, head of global markets for the Americas at StanChart, the UK bank announced in October it had hired Michele Nicoletta to head credit trading for the Americas, Harvey Black as head of investor sales and Nilson Strazzi as head of bank sales. Both were joined by additional staff. Alexis Lasser also joined at the time as head of illiquids and private placements. Russell Ashcraft runs the bank’s bond syndicate.

Brazil’s BNDES has inaugurated what should be a busy 2010 for DCM, beating sovereigns to the punch with $1bn in 2020s priced tighter than investors wanted. The issuer landed bang on 187.5bp-area guidance, some 70bp-80bp wide to the sovereign and 15bp-20bp above existing BNDES 2019s, say bankers and investors. The government development bank priced the Baa2/BBB minus bond at 98.949 with a 5.500% coupon to yield 5.634%, or UST plus 187.5bp. The deal ended flat to slightly down, traders say, likely owed to tight pricing. The book was heard to reach almost $3bn, with the BNDES indicating in the morning that the bond would not grow. “There should be a rush to get out the door – issuers want to get deals done before Treasuries rise,” says a major London-based EM investor who passed, noting a thin spread to the sovereign. The investor adds that that with US data improving, interest rates may rise sooner than expected. About 55% of the 2020 went to US investors, 35% to Europe and 10% to Asia and LatAm, according to bankers on the sale, who also note significant US high grade presence. “Crossover from high-grade buyers becomes more with every [LatAm investment grade] transaction,” says a banker managing the sale. Barclays and HSBC ran the sale, which comes 6 months after a $1bn 2019 bond priced to yield 6.45%. The BNDES has become a more regular issuer since returning in May 2008 after a 7-year hiatus, and should be much more frequent as it continues to bolster the Brazilian corporate sector. Bankers away from the trade note that it might serve as a useful benchmark for Banco do Brasil, rumored to be coming soon with a 10-year. Investors also expect Mexico, Colombia or the Brazilian sovereign to tap this week, as per tradition, and note there is still plenty of money to be put to work.

Issuers, investors and bankers heading are all hoping that the New Year will extend the strong DCM run of 2009. As several of the usual, and some not-so-usual, suspects prepare for January, optimism remains high. “We still have good inflows and there’s still a lot of interest in the market,” says Cathy Elmore, who manages $550m in EM debt at Blackfriars Asset Management. “As long as treasury yields are low, I think a lot of the new issuers will still be able to come to the market with ease.” She expects frequent names like Mexico, Brazil, Petrobras and Pemex to be among the first to tap in January. Colombia has also typically been a January/February borrower. Some less regular names should also be hitting the market soon, including Argentina, which has filed a $15bn shelf with the SEC. The sovereign hopes to cut a January deal with 2005 holdout creditors – possibly paying using a fund created with $6.66bn in forex reserves – followed by a new issuance. The market expected a 10-year of perhaps $1bn in size. Barclays, Citi and Deutsche worked on a pre-crisis workout attempt, and they are favorites to bring Argentina’s first bond in almost 10 years. Elsewhere, the Dominican Republic has reiterated its intentions of coming to market in Q1. The sovereign has said it wants to borrow $500m-$600m in 2010, with the market expecting a 10-year through Barclays and Citi. DCM bankers remain busy this week and forecast a brisk January as long as investors keep their wallets open. “I have 10 mandates,” says a banker at a major bond house, adding that the deals will likely be spaced out through January and February. “We’ll see a lot of deals early, we’ve got a very good backdrop,” says another DCM official. There was more than $95bn equivalent in DCM issuance this year, almost double the $54bn seen in 2008, according to Dealogic.

Chilean IT company Sonda has sold UF3.0m ($120m) in local bonds in 2 tranches. According to a DCM banker at Celfin, which managed the sale, the company sold UF1.5m in 5-year bonds at 97.00 with a 3.50% coupon to yield 3.82%. It also sold UF1.5m in 21-year bonds at 88.00 with a 4.50% coupon to yield 4.61%. Sonda’s 2010-2012 plans call for investing $500m, part of which will be used for acquisitions in Brazil, Mexico, Colombia and other countries in the region. The company in August tried to acquire Chilean peer Quintec for about $49.0m, but was unsuccessful. Celfin also advised that deal.

BBVA Colombia’s board has authorized a bond issue program in which up to COP200trn will be sold in 10 tranches, the bank says in a prospectus filed with the local stock exchange. A DCM banker with BBVA Valores, the shop that will manage the sale, explains that the issues will be made over a 3-year period depending on market conditions and that the maturity and issue date for each tranche has not been set yet. She also says that no date has been set for the first issue. Of the 10 tranches, 2 will be denominated in COP pay a variable rate over DTF, 2 will pay a variable rate over IPC and be denominated in COP, 2 will be denominated in UVR and have a fixed rate, 2 will have a fixed rate and be denominated in COP, and the other 2 will pay a variable rate over IBR. Proceeds of the issue will be used for working capital and debt refinancing, the bank says. These bonds have a local AAA rating from Fitch.

Santander Chile has opted to snag low-cost funds from the DCM before year end, reopening its 2012 for $300m. The bank paid a yield of 2.657%, or UST plus 138bp, joining fellow high-quality issuer Brazil in retapping a benchmark this week. The Aa3/A+ rated 2.875% bond reopened at 100.601 to price in line with 140bp area whispers. Proceeds from the issue are earmarked for general corporate purposes. Deutsche Bank and Santander managed the sale. Santander announced at $250m Thursday morning, but upsized by $50m, following oversubscription, a banker on the deal says, declining to specify total demand. It was an opportunistic decision, based on low UST spreads. The bond was originally issued in November, for $500m to yield 2.926%, or UST plus 157bp. The bank is looking to expand the benchmark, as many traders and investors consider its previous bonds illiquid. Buyers like the name, as it typically comes wide to similarly rated banks in the developed world.h