Mexico has kicked off this year’s DCM issuance, reopening its 2044 benchmark bond to raise $1.5bn. Drawing $3bn demand, the sovereign took out a large piece of its funding needs ahead of what is expected to be heavy supply and possible continued movement of US treasury rates. “One of the risks for the year is that US treasuries will move higher. High caliber issuers like Mexico are doing the right thing, tapping the 2044 bonds now and not waiting for other big issues,” says a London-based portfolio manager. Recent fluctuations and expectations of possible higher yields ahead made some buyers reluctant to take on duration. “There is chat the fed could perhaps shut down QE earlier than expected and the market has reacted a bit so we have to be prudent,” says a buysider who opted out of the trade. Nonetheless, demand was enough for the Baa1/BBB/BBB sovereign to price with less than 10bp concession. UMS reopened the 4.750% coupon bond at 109.615 to yield 4.194%, or UST+110bp, at the tight end of 110bp-115bp guidance and earlier 115bp-area talk. The bond was trading at 109.35-109.65 Monday. The deal came with a 7bp-8bp concession against a G-spread of 102bp, Alejandro Diaz de Leon, Mexico’s public credit director, tells LatinFinance. “It was important for us to take advantage of attractive market conditions and still get a historically low yield and spread [on the long end]. After approval of the new [US] fiscal measures that took place last week abated the uncertainty in the market, and, though still in progress, those elements created a market tone that was good for us to move sooner rather than later,” Diaz de Leon says, noting participation from 123 accounts. High-quality buyers from the US pension and asset management space accounted for the bulk of demand, with significant participation coming from Asia and some from Latin America, according to a person familiar with the sale. Barclays and JPMorgan managed the transaction, which brings the bond’s total size to $4.4
Category: Bonds
Sabsep Starts Roadshow
Companhia de Saneamento Basico do Estado de Sao Paulo (Sabesp) has started the roadshow period ahead of a BRL1bn ($483m) sale in Brazil’s domestic bond market, according to a prospectus, with bookbuilding scheduled to begin February 6 and finish by February 20. The Sao Paulo water utility has the option of up to three tranches, with the final terms to be set during bookbuilding. A 2018 tranche pays the DI plus 0.85%, and amortizes in three equal parts during the final three years. An inflation-linked 2020 tranche pays up to 5.70%, and amortizes in two equal parts during the final two years. An inflation-linked 2023 tranche pays up to 6.15% and amortizes in three equal parts during the final three years. A 15% greenshoe is also available. Proceeds repay existing debt. Banco do Brasil and Bradesco are managing the sale, rated AA+ on a national scale.
Sodimac Nears Local Bond
Sodimac is expected to issue up to UF2.5m ($121m) in Chile’s domestic bond market on Thursday, according to people familiar with the issuer’s plans. It can choose from a 3.4% coupon 5-year UF bullet tranche, a 6.5% coupon 5-year peso bullet tranche, a 3.6% 10-year UF bullet tranche and a 3.7% 21-year UF tranche with a 10-year grace period. It is expected to select the 21-year bullet and could then pick between the 5-year peso and UF tranche. Banchile is managing the deal, rated AA on a national scale. In August, Sodimac sold COP300bn in Colombia’s domestic market, in an issue that saw 2.8x demand. Sodimac is the home improvement unit of Chilean retailer Falabella.
Chile to Debut 30-year Domestic Peso Bond
Chile’s government plans to include 30-year peso-denominated bonds among its domestic market issuance this year, it says, as part of the $5bn it foresees issuing locally. It says that establishing such a long-term benchmark is in the best interest of the economy, and points to the role the new instrument could play in deepening the mortgage market. Chile previously only sold 30-year domestic bonds denominated in the UF inflation-linked unit. The 2013 agenda includes peso bonds with maturities of 10, 20 and 30 years, and UF bonds of 7, 10, 20 and 30 years. “The announcement could also be interpreted as an attempt to empower the central bank by pushing the Chilean economy toward inflation de-indexation,” Barclays says in a report.
Eletropaulo Gets Domestic Funds
Brazil’s Eletropaulo has raised BRL600m ($296m) through the sale of domestic bonds, according to Anbima. The AES subsidiary’s 2021 debenture pays the DI+1.5% and amortizes in annual installments beginning in 2018. Bradesco managed the sale, done under the rule 476 restricted format. The transaction follows the public market sale of BRL750m the utility finished in October, when it paid DI+1.24% for 2018 bonds. Eletropaulo is rated AA+/Aa1 on a national scale.
IDEAL Road Concession Readies Debt
Impulsora de Desarollo y el Empleo en America Latina’s (IDEAL) plan to raise up to MXP10bn ($786m) in Mexico’s domestic bond market at four of its toll roads is gaining momentum, with Moody’s assigning an Aa2 to the Banco Invex trust issuing on behalf the concessions. IDEAL plans to sell peso-denominated notes with a 30-year maturity. “The total amount approved under the Invex program is MXP 10bn and the entire amount is expected to be used in the first issuance,” the agency says. The four concessions involved are the Autopista Chamapa La Venta road serving the area to the west of Mexico City, the Tijuana-Tecate unit making up a portion of the road from Tijuana to Mexicali, the Libramiento de Toluca serving the Toluca region and the Autopista Tepic-Villa Union running from Tepic, Nayarit to Mazatlan, Sinaloa. All the roads are wholly-owned subsidiaries of IDEAL. Proceeds from the issuance will be distributed back to the originators on a proportionate basis and then to IDEAL to be used for additional investments in concessions in Mexico and Latin America, Moody’s adds. Inbursa has been named as a bookrunner.
More Gloria Units to DCM: CFO
After a successful $325m bond sale in which Corporacion Azucarera del Peru (Coazucar) drew $4.5bn demand from Andean-hungry investors in July, other Grupo Gloria entities are considering the bond market. “We had a successful issuance with Coazucar, very well received and which performed very well in the secondary. Not only Coazucar, but perhaps other holding companies in dairy and cement could be going to the market in 2013 or 2014,” CFO Francis Pilkington tells LatinFinance, noting interest in a similar size and tenor as the Coazucar trade. Gloria has nine units in the food and dairy segment and five in the cement sector operating in Peru, Bolivia, Ecuador, Colombia, Argentina, Puerto Rico and Uruguay, in addition to other sectors. Pilkington says Gloria is evaluating more fundraising as it actively looks at expansion in cement and dairy – where it sees excellent growth potential – through acquisitions in the countries where it already operates. Its most recent purchases include a 55% stake in Uruguayan dairy company Ecolat Uruguay and a 48% stake in Bolivian cement concrete and aggregate products manufacturer Sociedad Boliviana de Cemento (Saboce). The group owns a 75% stake in Ecuador-based dairy company Lechera Andina, a 50% stake in Argentine-based Compania Regional de Lacteos Argentina (Corlasa), and a 100% stake in Colombian milk processing company Algarra. It owns Peru-based Cement and concrete business Yura and three Yura subsidiaries cement and lime producer Cemento Sur, ammonium nitrate producer Industrias Cachimayo and concrete producer Concretos Supermix. While the group generates sufficient internal cash flow to finance growth through acquisitions, the group allows each unit to self-manage acquisitions independently and according to its own ratios of profitability and cash flows. Gloria continues to keep close tabs on the bond market and continues to see attractive pricing, Pilkington says. “We have seen other very successful issuances from other corpo
Promigas Watches Local Market
Promigas will look to issue up to COP580bn ($328m) in Colombia’s domestic bond market later this month or in early February, according to a person familiar with the Colombian gas company’s plans. It will aim for 10-20 year maturities, likely issuing a 10-year, 15-year and 20-year tranche. Corficolombiana is managing the deal, rated AAA on a national scale, with Casa de Bolsa, Corredores Asociados and Serfinco also acting as bookrunners. Funds will be used to refinance liabilities. Promigas last sold bonds in the domestic market in August 2009, raising COP400bn at various maturities via Bancolombia.
Slim Bank Lays Groundwork for Local Debt
Mexico’s Inbursa has filed a shelf to issue up to MXP30bn ($2.3bn) in the domestic bond market, according to regulatory documents. Inbursa is the only bookrunner associated with the program so far. The Carlos Slim-owned lender’s most recent domestic bond was an MXP8.05bn ($621m) offer in November. It sold MXP6.43bn in 2014 bonds at TIIE+20bp, and MXP1.62bn in 2016 bonds at TIIE+30bp. Inbursa, Banamex, Bancomer, HSBC and Banorte-Ixe managed that transaction. Inbursa is rated AAA on a national scale.
Terpel Prepares Domestic Issuance
Colombian fuel company Terpel could look to issue COP700bn ($397m) in Colombia’s local bond market, according to regulatory documents. It is in the process of registering bonds with a maturity between 18 months and 20 years. Further details are not yet available, and the company was not immediately available to comment. Separately, Terpel’s sale of Chilean assets to Quinenco has been approved by Chile’s Supreme Court. The country’s antitrust court had previously stepped in to block the $320m sale, agreed in September 2011 of Terpel Chile assets to Quinenco.