Category: Bonds

Embotelladoras Arca is preparing to return to Mexico’s local DCM, raising up to MXP1.5bn. The Mexican bottler rated AAA on a national scale is readying a 2012 floating tranche and a 2016 fixed rate tranche, possibly coming to market in early June, according to a banker on the deal. HSBC, BBVA and Bank of America are managing the transaction. Arca was one of the first issuers out of the gate in February, after a long dry spell for Mexican DCM, pricing MXP1.4bn in 13-month bonds at the 28-day TIIE plus 155bp.

DCM bankers are pitching various foreign borrowers the idea of bond issuance in Chile’s domestic market, following American Movil’s blowout April deal. Peru’s BCP has filed for a program in Chile, according to officials at the bank, and it could become the second issuer in that format. Hugo Horta, head of DCM at Chilean boutique IM Trust tells LatinFinance that his shop and competitors are pitching several potential issuers in Mexico, Peru, Colombia and Brazil. New York-based bankers at other shops confirm they are actively marketing the structure. The funding is attractive in dollar terms and Chilean institutional investors are hungry for diversification, says Horta, who declines to name companies he is pitching. America Movil offers most of the important characteristics that other issuers would need – high quality credit in a defensive industry well understood in Chile, in which the borrower also has sizeable domestic operations – local DCM bankers say. “There is not a company in Chile as large and as successful as America Movil is in its sector – this is an advantage,” says Horta. America Movil priced April 18 UF4m ($145m) in 5-year AA+ rated bonds on Chile’s domestic market at 98.61 with a 3.00% coupon to yield 3.31%, or 141bp over the government, after drawing demand of around UF6.4m. According to the issuer, the price equates to roughly 4.5% in dollars, and was reduced from an initial 3.5% yield target. The America Movil dollar-denominated 5.5% of March 2014 was yielding roughly 6.0% at the time, and the issuer scrapped a tabled CLP piece since demand was biased towards UF. Banchile-Citi managed the sale, which comes from a $1.2bn shelf and America Movil – one of the region’s most sophisticated issuers – says it plans to return to that market. The Mexican wireless provider claims it is the first “huaso” bond, or issue in Chilean currency placed directly by a foreign entity. Bankers explain that if conditions that allow for such pricing hold, Chile’s market wil

Colombia’s Empresas Publicas de Medellin (EPM) is heard shortlisting HSBC, Citi, Merrill Lynch and JPMorgan to lead its planned dollar bond offering, according to DCM bankers following the transaction. The Colombian utility had issued in April an RFP for an issue likely of $500m in size and 10 years in tenor. Proceeds from the sale, expected to happen this year, would fund acquisitions as EPM plans to grow beyond Colombia’s borders. Compatriots Ecopetrol and ISA are also in the process of selecting bookrunners for cross-border issues.

Yields on Panama’s most liquid bonds, the 2015s and 2036, are virtually unchanged after opposition candidate Ricardo Martinelli won the elections by 60% to 37% on May 3, says Kathryn Rooney, senior EM strategist at Bulltick. The yield on the 2015s, which closed at 5.66% Friday, traded at 5.65% the day after the elections. The 2036s, Rooney says, did not move since Friday and stayed at 7.08%. “Although this news was not a market mover, we view the results in a very positive light for the continued positive trajectory in the Panamanian economy,” Rooney says. Martinelli, in Bulltick’s view, will prove to be a very market-friendly president and has declared his intentions to encourage further FDI, boost the passage of an FTA with the US, improve relations with the US, maintain fiscal accounts health, and decrease tax rates. “Given that we do not expect Martinelli to introduce any dramatic changes the Panama’s current policy framework, one that has served the country well, we view the outcome of yesterday’s election as credit neutral,” says JPMorgan.