Brazil’s Banco Pine is preparing to issue BRL300m ($148m) in letras financieras (LF) in Brazil’s domestic debt market, it says. The issue comes under a BRL1bn program. It does not offer information regarding the timng of the sale, which awaits regulatory approval. BTG Pactual, Santander and Pine Investimentos are managing the sale. Pine is rated A+ on a national scale. The bank is also considering the sale of bonds in Chile’s domestic market, having met with investors and registered a UF6m ($282m) program of up to 10 years with JPMorgan and Celfin.
Category: Paywall
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Rule Change Seen Benefitting Mid-Size Banks
Measures announced by Brazil’s Central Bank lowering banks’ reserve requirements should benefit the country’s mid-sized banks, Barclays says. “In our view, this decision was taken by BCB to primarily make sure liquidity conditions remain intact for smaller banks post the announcement of the liquidation of Cruzeiro do Sul,” the shop says. The Central Bank is incentivizing Brazil’s large-cap banks to use funds freed up under the changes to direct resources to either buy loan portfolios or Letras Financeiras from smaller banks. SME-focused mid-sized banks such as ABC Brasil, Bicbanco and Daycoval should be the ultimate beneficiaries of these measures, Barclays says, given their sound credit risk profiles, allowing them to extend their funding terms at the same time as lowering funding costs. Banks in lending JVs with larger banks, such as BMG and Banco Votoratim could also benefit, either from the sale of a portion of their loan portfolios to their partners or from additional funding. Brazil’s Central Bank announced Friday a reduction in the additional reserve requirements for demand deposits – to 0% from 6% – and time deposits – to 11% from 12%. The measures are effective immediately and aim to add as much as BRL30bn ($14.78bn) of additional resources to the banking system.
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Telefonica Brasil Defines Domestic Jumbo
Telefonica Brasil has finalized the sale of BRL2bn ($985m) in Brazil’s debenture market, according to Anbima. The 2017 bullet debenture pays the DI+0.75%. The unit of the Spanish telecom and operator of the Vivo brand plans to use about half of the proceeds to pay for spectrum purchased in an Anatel auction last June, and the other half to refinance short term debt, according to Moody’s. Banco do Brasil managed the sale, done under the rule 476 restricted format and rated Baa1 on a national scale. More fundraising is seen ahead in the short-term for the LatAm Telefonica units. The company’s Spanish parent is considering an IPO for its Latin American operations in order to raise additional funds, according to bankers following the situation.
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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).
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Without Buyer, Cruzeiro do Sul to be Liquidated
Banco Cruzeiro do Sul is to be liquidated, Brazil’s Central Bank says, after the Fundo Garantidor de Credito (FGC) failed to find a buyer for the mid-size lender. The decision puts an end to a process that began with fraud investigations and which the FGC tried to resolve through a 51% haircut on the bank’s dollar bonds and attempt to find a buyer among Brazil’s larger banks. The FGC offer to bondholders expiring last week got 88.7% acceptance, the FGC says, though the tender was contingent on the bank finding a buyer. It had been looking to offer holders cash for $1.58bn in bonds in a process led by Bank of America Merrill Lynch and HSBC. Brazil’s central bank seized Cruzeiro in June after finding “unsubstantiated asset items,” and the bank was under the temporary administration of the FGC during an investigation. The debt default is said to be the region’s biggest since 2002. Banco Prosper, which Cruzeiro agreed to buy last year, is also to be liquidated. About 35% of Banco Crizeiro do Sul’s deposits and 60% of Banco Prosper’s are guaranteed by the FGC.
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Banco do Brasil Lands Euroyen
Banco do Brasil has raised JPY24.7bn ($315m) though a Euroyen bond transaction, in its largest Japanese yen transaction to date. The 2015 priced at par to yield 1.80%, or yen swaps plus 146bp, in line with yen swaps plus 145bp-150bp guidance, though wide to the 128bp-138bp level originally sought earlier in the year, says a banker familiar with the deal. The bank discussed a deal of up to $500m with investors in July, though elected to wait until this month. The choice to issue a Euroyen – a yen-denominated bond issued by a non-Japanese company outside of Japan – represents a change from the Samurai yen-denominated bonds that LatAm issuers have used in a handful of sales in recent years. Bank of America Merrill Lynch, Banco do Brasil, JPMorgan, Mizuho and SMBC Nikko managed the transaction. The Baa1/BBB Brazilian bank issued $24m-equivalent in yen-denominated bonds in 1995, according to Dealogic.
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BNDES Supports Brazilian Port
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.
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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.