BNDES has approved BRL920m ($455m) to the state of Pernambuco’s port development program, it says. The funds will support the upgrading of the docks, access roads and other infrastructure around the Suape port complex. The development bank does not disclose the details of the loan, and officials were unavailable for comment.
Category: Paywall
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Colombia Surprises with Global TES
Colombia jumped out into the international market Friday with a COP1trn ($559m) 2023 bond, a move that allowed the republic to print its second largest-ever global TES issue and attain its lowest coupon for a local currency denominated issuance. “After this week’s developments we thought it was perfect timing to issue a TES at appropriate levels. Pricing at 4.5% shows an important vote of confidence from international investors for our economy and country,” Maria Fernanda Suarez, Colombia’s public credit director, tells LatinFinance. Suarez says the deal offered investors a 20bp-25bp concession, with Colombia’s existing 2021 TES trading in the low-4.0% area Friday. The new bond priced at 98.995 with a 4.375% coupon to yield 4.500%, in line with 4.500%-area guidance following mid 4.000%-area whispers. Suarez notes the 2023 priced 200bp inside the local TES curve, and 25bp inside of the Colombian central bank overnight lending rate of 4.75%. “[The deal represents] good value to a slightly expensive curve,” says a London-based investor following the deal. “Issuing in Global TES makes sense as it reduces currency appreciation pressures for investors who would like to invest in the local market,” says Nomura strategist Benito Berber. The sale drew 2x demand from 70 accounts, with the top 10 accounts putting in for $400m in orders, according to bankers on the deal. The transaction allowed the sovereign to complete the $500m left under its $2bn financing plan for 2012. Bank of America Merrill Lynch and Morgan Stanley manged the sale, rated Baa3/BBB minus. Colombia remains committed to keep its benchmarks both in TES and USD and while a dollar transaction is not imminent, Colombia continues to closely monitor the dollar markets and foresees its next transaction in USD, Suarez says. “The issuance matches Colombia’s financing plans perfectly and matches the maturity of a bond due early next year, but it doesn’t match the liquidity of other TES bonds,” Berber says. He adds
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Comerci Gets Upgrade
Moody’s has upgraded the rating of Mexico’s Controladora Comercial Mexicana (Comerci) to Ba1 from Ba3, it says. “The upgrade reflects Comerci’s much stronger credit metrics following the paydown of debt from proceeds of the sale of its ownership in Costco de Mexico,” the agency says. Comerci has repaid MXP12.72bn of debt and Moody’s expects the retailer to refinance its remaining debt under much better conditions that will ultimately provide the company with financial and operating flexibility that was restricted under the restructured debt. Moody’s highlights a fairly defensive business model and significant market position in central Mexico, but also notes the longer term challenge of preserving its market share in an increasingly competitive local retail sector. Comerci’s national scale ratings were raised to Aa3 from Baa1. The outlook is positive.
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EM Debt Books Inflows
EM debt funds booked net inflows of $1.63bn during the week ended September 12, according to EPFR. In terms of performance, the asset class was up 0.85% for the week ended September 13, for a year-to-date gain of 13.64%, according to Lipper. Global income funds gained 0.91% during the week, and are up 6.80% ytd. International income funds rose 1.69% during the week, for a 6.94% gain ytd.
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Equity Funds Gain Inflows
LatAm equity funds saw net inflows of $170m and EM equity funds saw net equity inflows of $447m during the week ended September 12, according to EPFR. In terms of performance, LatAm funds gained 3.59% during the week ended September 13, and are up 7.54% year-to-date, according to Lipper. EM funds rose 3.27% during the week, to bring them to a ytd gain of 11.05%. Global small and mid-cap funds rose 2.82% on the week, and have earned 14.95% ytd.
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IDB Lends $700m in Argentina
The Inter-American Development Bank (IDB) has agreed to provide $700m in funding to Argentine government programs, it says. A $500m, 24-year loan with a 6.5-year grace period and variable interest rate based on Libor will help fund improvements in the Norte Grande region, with a focus on water collection, treatment, and distribution, as well as the handling of sewage and storm water. The government will weigh in with $55m in counterpart funding. Meanwhile, a $200m, 25-year loan with a 5.5-year grace period and variable interest rate, paired with local financing of $66m, is set to support business projects and enable public-private consortia work. The development bank declines to offer additional details.
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ISA Considers Refi
Colombia’s ISA could look to refinance at least $300m of debt tied to its Peruvian operations through a transaction in the international markets, CFO Camilo Barco tells LatinFinance. He expects his company would generate substantial investor interest, based on a flight to quality mentality among buyers and the perception of ISA as a low-risk name in a popular sector. ISA, which operates in Brazil, Peru, Chile, Bolivia, Ecuador, Argentina and Central America, last issued bonds in December of last year. The $154m-equivalent sale included 12 and 30 year domestic notes.
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Lupatech Readies Share Auction
Lupatech is preparing to sell up to BRL439m ($217m) in new shares, as part of a BRL700m capitalization plan agreed earlier this year, it says, and will set a date for a public auction as soon as it receives regulatory approval. The maker of parts for the oil industry is offering 109.8m shares at BRL4.00 each, a price agreed in April by its major shareholders. Shareholders BNDESPar and Petros are obliged to subscribe BRL184m, as well as pick up any additional unsold shares in the auction in order to achieve a minimum BRL300m size. Banco Votorantim is managing the process.
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Mexichem Tops 75% in Tender
Mexichem has received acceptance from holders of $267m or 76.32% of its $350m outstanding 8.750% 2019 bonds, it says, in a tender offer closed last week. In addition, the chemicals producer has received the minimum consent needed to eliminate restrictive covenants. Mexichem offered holders $1,245 cash per $1,000 principal, which includes $30 for adopting proposed covenant amendments. The tender is funded by last week’s well-bid sale of 10 and 30-year bonds. The sale included $750m in 4.875% 2022 bonds priced at 5.000% yield and $400m in 6.750% 2042 bonds priced at par. Mexichem amassed about $17bn in total orders. Citi, HSBC, JPMorgan and Morgan Stanley led the tender offer and the last week’s bond sale. The quartet is also managing an equity follow-on transaction, expected to raise as much as $1bn, that is awaiting launch.
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Rossi Renegotiates Covenants
Rossi Residencial is in the process of renegotiating covenants with Brazilian Securities for one of its domestic debt issuances, it says. The bonds were sold entirely to Brazilian Securities in order to back a sale of Certificados de Recebiveis Imobiliarios (CRI) in Brazil’s domestic market. The Brazilian developer expects negotiations to proceed “without difficulty.” It adds that similar agreements have been reached with Bradesco, Caixa Economica Federal and BTG Pactual regarding covenants on other domestic bonds. It does not elaborate on the restrictions to be adjusted, but says the renegotiations will help “allow potential improvements to accounting practices.” Rossi is also preparing a private share subscription that could raise as much as BRL500m ($245m).