Brazil’s Usiminas plans to issue BRL1bn ($476m) in 2019 domestic bonds, it says. The steelmaker had been considering both four and six-year maturities. The debentures will pay DI+1.0%. Usiminas is raising funds to repay debt due this year. Banco do Brasil and Bradesco are coordinating the sale, to be done under the rule 476 restricted format and rated Aa1 on a national scale.
Category: Bonds
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BBVA Continental Sees Well-Bid Sale
Peru’s BBVA Continental has raised a $300m bond, capitalizing on Peru’s booming growth and investor appetite for Andean credits to generate $2bn in orders. The BBB/BBB+ bank priced the 3.5-year bond at 99.786 with a 2.250% coupon to yield 2.314%, or UST+195bp, the tight end of UST+205bp-area guidance and low-to-mid 200bp initial talk. The new 2016 bond was trading up 0.125 in the grey Tuesday, according to traders. Both people on and away from the transaction comped the bond against Banco de Credito del Peru’s (BCP) 2016 bonds which were quoted at UST+195bp. The new bond also priced through Continental’s outstanding 2017 bonds, quoted at UST+235bp, according to bankers on the sale. The leads say the 3.5-year maturity was chosen to fill a gap in the issuer’s curve. “The fundamentals for Peru and Latin America are there and that is why they are able to access this kind of demand,” says a debt analyst following the credit. BBVA is looking to access more competitive funding costs in the international market as it seeks to expand its loan portfolio, he notes. US buyers accounted for about 55% of the deal, with about 32% coming from Europe and the remainder from other regions. Fund managers drove the bulk of demand, comprising 75% of the order book. BBVA, Bank of America Merrill Lynch and Citi managed the sale, rated BBB/BBB+.
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Colombia Returns for $1bn
Colombia emerged with a new $1bn 2023 benchmark bond, conceding fewer than 10bp after generating $3bn in demand. Starting at UST+95bp-area guidance, the sovereign tightened to price at 99.179 with a 2.625% coupon to yield 2.718%, or UST+88bp. The bonds were trading up 0.45 points in the grey Tuesday afternoon, according to a trader. “The bond at 95bp spread over UST looked cheap to the curve, but the curve was expensive to begin with, and will likely re-price with higher yields with this deal,” says a US-based investor looking at the transaction. The new bond was comped to Colombia’s outstanding 2021s, which were trading at a G-spread of 77bp-78bp pre-announcement. “Colombia is a key investment for global investors looking at EM, but at a yield of UST+95bp, that is too tight,” says a European-based EM-dedicated investor, referring to the initial price talk. He notes that Colombia is relatively expensive compared to Peru, Mexico and Brazil. Renewed political risk, coming after the FARC rebels declared an end to their ceasefire with Colombia’s government, also adds to concerns. Deutsche Bank and Goldman Sachs managed the Baa3/BBB/BBB minus transaction. Colombia’s government has a $2.7bn international bond issuance target for 2013, though analysts note that the Colombia has issued less than planned in recent years, as it prefers its local curve. Its previous cross-border deal was a COP1trn ($560m) 2023 global TES in September that yielded 4.5%. That sale capped off $2.06bn in issuance for 2012, compared to a $3.3bn ceiling. Tuesday’s sale is only the second from a LatAm sovereign this year after Mexico’s $1.5bn 2044 retap. In contrast to the usual pattern, the region’s higher-yielding credits haven’t waited for a steady stream of sovereigns and quasi-sovereigns to open the markets. Ba1/BB+ rated Banco Davivienda raised $500m Tuesday, and fellow high-yield credits Corp Group, Banreservas and Exalmar are expected to hit the market this week.
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Davivienda Lands Short Benchmark
Andean issuers continue to dominate the debt capital markets in January, with Colombia’s Banco Davivienda joining the sovereign in printing a new benchmark Tuesday. The order book for the $500m 2018 was heard reaching $5bn, trumping the $3bn demand the government got for its new $1bn 10-year. The Ba1/BB+ bank was able to fill the 5-year spot on its maturity profile at costs seen flat to its dollar curve. It priced at 99.742 with a 2.95% coupon to yield 3.00%, or UST+225bp, tight to UST+250bp-area guidance and UST+275bp-area initial talk. The bonds were up 0.25-0.50 points in the grey, according to a trader. “The deals are coming in too tight, but that doesn’t matter because Davivienda fills a sweet spot in the 5-year space,” says an investor following the deal. He notes a preference among the buyside for staying shorter in higher-quality credits at the moment. Credit Suisse and JPMorgan managed the transaction, coming after Davivienda lifted its borrowing authorization to $500m from $300m earlier this month. The sale follows a similarly well-bid DCM debut in June in the 10-year space, getting a 5.95% yield. Later last year, the growing bank closed the acquisition of the former HSBC subsidiaries in El Salvador, Honduras and Costa Rica.
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Elecmetal Plans Local Debt
Chile’s Elecmetal has initiated the process to issue up to UF1.5m ($73m) in 10-year and 30-year domestic bonds, according to regulatory filings. The proceeds would be used for investment and repaying debt. A deal would be the first since 2009 for the producer and supplier of steel and iron components for the mining industry. It sold $57m-equivalent in inflation-linked 2032 bonds at a 4.50% yield in 2009, via IMTrust. Elecmetal is rated AA minus on a national scale.
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Axtel Extends Early Deadline
Mexico’s Axtel has once again extended the early deadline of its bond exchange offer, it says, to Thursday. Axtel last week received acceptance from a majority of bondholders, satisfying a minimum acceptance condition, following an improvement to the offer’s original terms. In the offer expiring January 28, the telecom is targeting its outstanding 7.625% 2017 and 9.000% 2019 bonds. It is offering $594.61 per 1,000 principal – comprised of $500 in senior secured 2020 bonds, $44.61 in peso-denominated dollar-indexed 2020s and $50 cash, it says. Holders accepting before the early deadline receive an additional $116 per $1,000 principal. Axtel plans to issue new 2020 step-up notes, starting at 7.0%, stepping up to 8% through the first year and 9.00% after year two. Axtel is rated Caa2/CCC+/B minus.
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BNDESPar Makes Biotech Investment
BNDESPar has agreed to buy a BRL600m ($294m) stake in of GraalBio, a Brazilian biotechnology firm, it says. The investment arm of the BNDES development bank gets shares worth 15% of the company, which specializes in second-generation ethanol and biochemicals. It is BNDES’ first investment in this area, in which biofuels which are made using residue from wood, corn, sugarcane bagasse and wheat straw. GraalBio plans BRL4bn in investments during the next six years.
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CorpBanca Eyes COP Bonds
CorpBanca is considering the issue of some COP250bn ($141m) in Colombia’s local bond market in the first half of February, according to people familiar with the transaction. The bank is heard able to choose among 5, 7, 10, and 15-year maturities for the IPC-linked debt, with the sale able to be upsized to as much as COP350bn. CorpBanca is expected to manage the sale, rated AA+ on a national scale. This would be its first issuance in the Colombian market, following its entrance into Colombia’s retail banking sector through the acquisitions of Santander Colombia and Helm Bank in the past 14 months. Santander Colombia and Helm had each previously borrowed in the domestic bond market. CorpBanca has been raising money at various levels to help fund its acqusitions. CorpBanca sold $800m in 2018 bonds earlier this month in its first-ever international bond sale, clinching a 3.240% yield. It is also undergoing an equity follow-on concluding next month that is expected to raise more than $600m. Corp Group Banking, the holdco for CorpBanca, is currently preparing what is expected to be a $500m sale of 10-year bonds in the international market. Deutsche Bank and Goldman Sachs are managing the transaction, which could come as soon as this week.
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FEFA Preps Domestic Bond
Fondo Especial para Financiamentos Agropecuarios (FEFA) is preparing to sell floating-rate bonds in Mexico’s domestic market, according to regulatory filing. FEFA is heard targeting a 2016 bond which will represent its third domestic issuance, according to a person familiar with the company’s plans. FEFA has filed to issue up to MXP6bn ($472m), an amount that will allow the issuer flexibility in terms of the final issue size, which will depend on demand. Pricing is expected to happen before the end of March. Proceeds will be used to fund FEFA’s operations. BBVA Bancomer, Banamex and HSBC are managing the deal, rated AAA on a national scale. FEFA is a trust operated by development bank Fideicomisos Instituidos en Relacion con la Agricultura (FIRA). Established in 1954 by Mexico’s federal government, FIRA offers credit and guarantees and other services to the livestock, fishing, forestry and agribusiness sectors in Mexico. In its previous transaction, it sold MXP3bn in 2015 bonds at TIIE+20bp, tight to TIIE+25bp expectations after seeing 3.5x in demand in October last year.
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Masisa Weighs International Debt Options
With the international debt markets proving receptive to high-yield issuers, Chilean board products manufacturer Masisa is debating between a debut cross-border bond and a syndicated loan, officials at the company say. “If the rates are attractive enough for a high-yield company like Masisa, we would go for the international bond. We think the appetite for high-yield is there,” CFO Juan Carlos Toro tells LatinFinance. Masisa could look to issue a 5-year or 10-year bond, raising $200m-$250m, he says, perhaps in the first half of this year. If rates are not appropriate, it could also consider the combination of a syndicated loan and local market bond during the next two years, he says. The proceeds would be used for refinancing the BB+ company’s outstanding debt. As of September 30, Masisa had $914m in bank loan and bond debt, according to regulatory filings. Fernando Menchaca, assistant director of finance, says the company has yet to pick any bookrunners. He also sees an attractive market for high-yield Chileans, pointing to recent oversubscribed transactions such as Automotores Gildemeister’s. In 2011, Masisa considered raising $200m-$250m in the international market, but had access to well-priced bank loans and opted instead for a loan plus a domestic bond. “You have to remember that at the end of 2011, the volatility of the market increased a lot. So we decided to go to a market we knew better,” says Menchaca. In the local market, it raised UF2m ($94m) via BCI and Scotia in a 5 and 21-year bond transaction that was 2x oversubscribed. It also signed $121m in 3 and 4-year international bank loans in December 2011, debt which represents the first large maturities it now faces. Higher-rated issuers in Masisa’s sector have found buyers in the past year. In April of last year, Chile’s Inversiones CMPC (Baa2/BBB+) sold $500m in 2022 bonds on the back of about $2.5bn in demand, pricing the 4.500% coupon notes at a 4.638% yield.