Sempra Mexico is planning to raise up to MXP5.2bn ($412m) in Mexico’s domestic bond market, according to regulatory documents. The issuer is able to choose among a 2018 tranche paying a spread to the TIIE and a 2023 fixed-rate tranche. Pricing is estimated for February 6. Deutsche Bank, Credit Suisse and Santander are managing the transaction, rated AAA/Aaa on a national scale. In October, the Mexican unit of US-based Sempra Energy won a 25-year contract to build and operate a pair of gas pipelines in the state of Sonora, which should require a $1bn investment including proceeds from the bond sale, according to ratings agency reports. Sempra operates five gas pipelines and a regasification terminal in Mexico, and derives about 60% of its revenues from CFE contracts.
Category: Bonds
Sugar Processor Tightens DCM Debut
Brazilian sugarcane processor Tonon Bioenergia has priced a $300m 2020 NC4 bond, increasing its cross-border debut from an initially planned $200m as investors filled a book that reached $1.4bn. Tonon was able to use investor demand for yield and an increase in risk appetite to ratchet down pricing from high 9%-area initial price thoughts to the tight end of 9.50%-9.625% revised price guidance. The B/B bond priced at 98.743 with a 9.25% coupon to yield 9.50%, and traded up around 3.0 points Wednesday afternoon, according to a trader. Tonon was thought to price flat to the 9.47% interpolated yield level of peer Grupo Virgolino de Oliveira’s (GVO) 2018 and 2022 bonds. “Despite Tonon being a smaller company, it is less levered than GVO and pricing flat to GVO made it look cheap,” says one investor looking at the deal. Tonon had net leverage of 2.6x versus GVO’s 4.9x net leverage, according to a report from Citi. More than 127 accounts participated and private banking and real money accounts were dominant in the book, according to people with knowledge of the sale. Buyers came mainly from the US, with some Europeans and limited Asian participation. Proceeds will be used to refinance approximately BRL281m ($133.5m) of existing secured debt and for general corporate purposes. BTG Pactual, Itau, and Santander managed the B/B sale. Tonon was founded in 1962 and sells VHP sugar, anhydrous and hydrous ethanol as well as other sugarcane byproducts. The company has a total crushing capacity of 5.7m tons per year, divided between its two Santa Candida and Visa Alegre mills. Private equity fund DGF Terra Viva owns a 48.4% stake in the company.
Bolivia a Comp for Paraguay: Barclays
Bolivia’s (Ba3/BB minus) benchmark 2022 bond, which priced under 5% in October last year, would serve as a comp for Paraguay’s debut benchmark-size 10-year bond, Barclays says in a report. Fair value should be 4.85-5.00%, with anything above this attractive, the bank adds. “Given the number of similarities between the two economies – both being open commodity-based economies with similar ratings – we think that Bolivia’s issuance would serve well as a comparison for pricing for a new bond from Paraguay,” Barclays says. Paraguay has previously indicated it would seek up to $550m at a maturity of up to 10 years. It is scheduled to finish a roadshow in Boston Wednesday. Bank of America Merrill Lynch and Citi are managing.
Brazilian Debutant Targets Single Digits
Brazilian sugarcane processor Tonon Bioenergia is aiming for high 9%-area initial price thoughts on a debut $250m 2020 NC4 bond, according to people following the sale, with investor interest heard reaching more than $700m by late Tuesday. Pricing for what would be an international market debut is expected as soon as today. Tonon finished a roadshow Tuesday following visits to Boston, London, Los Angeles and New York. Peer Grupo Virgolino de Oliveira’s (GVO) 2018 and 2022 bonds are considered to be direct comps, along with Usina Sao Joao Acucar e Alcool’s (USJ) 2019 bonds. BTG Pactual, Itau, and Santander are managing the B/B sale.
Eletrosul Plans Infrastructure Debentures
Brazil’s Eletrosul plans to raise funds for three wind generation projects through the sale of infrastructure debentures, according to government documents granting authorization for such a sale. The Geribatu I, II and III projects represent 66 megawatts of the 258-megawatt BRL1bn Geribatu project comprised of 10 wind farms in the state of Rio Grande do Sul. Specific details of any issuance are not yet available, a spokeswoman says. Eletrosul, a unit of Eletrobras, has 49% ownership of Geribatu, with private equity fund Rio Bravo holding 51%. The project should be operational in 2014. Eletrosul and Rio Bravo are also partners in the Cerro dos Trinidade wind project, which has also been authorized to sell infrastructure debentures.
Marfrig Demand Fattens Up Ahead of Sale
Brazil’s Marfrig was heard with order books reaching $2.5bn late Tuesday for a new 2017 bond, and was out with 10%-area guidance ahead of today’s expected pricing. The B2/B+/B+ rated meatpacker revised guidance from 10.25%-area and earlier mid-10% talk. It is targeting $300m, according to ratings agencies. “Marfrig’s bonds have rallied, which has allowed them to tighten in yield,” says a DCM banker away from the sale. Marfrig’s 2016, 2018 and 2020 bonds were trading to yield around 9.14%, 9.91% and 10.54%, respectively, on the bid side Tuesday afternoon. “When they first called us they were talking 11%-12%, but now higher-beta names have been outperforming,” says an investor following the deal. Proceeds are to be used to improve the company’s capital structure by lengthening its debt profile. Bank of America Merrill Lynch, Bradesco, Banco do Brasil and Itau are managing the transaction, to be done through the Marfrig Holdings Europe unit. Marfrig Alimentos and certain subsidiaries are guarantors. BAML took Marfrig on a non-deal tour in November. Marfrig’s last bond sale was in May 2011, when it raised a $750m 2018 bond at a 8.6% yield.
Minerva Talks Price
Brazil’s Minerva is out with mid-to-high 8% initial price talk for what is expected to be a $500m 2023 bond sale, according to people familiar with the process. The transaction could grow in size depending on interest in a cash tender offer the meatpacker plans to fund with the proceeds. Minerva is wrapping up fixed-income investor meetings today, and could price as soon as Thursday. Leads are using Minerva’s 2022 bonds, quoted at 8.15%-8.20% yield, as the most immediate comp. In the tender, the issuer is looking to replace its 9.500% 2017, 10.875% 2019 and 12.250% 2022 bonds. Minerva is offering holders $1,105 per $1,000 principal of the 2017s, $1,200 per $1,000 of the 2019 and $1,262 per $1,000 of the 2022s. The prices include a $30 per $1,000 bonus for holders accepting before a January 25 early deadline. The full tender offer expires February 8. There is $34m outstanding in the 2017 bond, $372m of the 2019 and $450m of the 2022. BTG Pactual, HSBC and Credit Suisse are managing the tender and new issue.
Axtel Sweetens Buyback Offer
Mexico’s Axtel has increased its offer to bondholders and extended the early deadline on a tender for its outstanding 7.625% 2017 and 9.000% 2019 bonds. After hearing investor feedback, the telecom is now offering $594.61 per 1,000 principal, up from $550 – comprised of $500m in senior secured 2020 bonds, $44.61 in peso-denominated dollar-indexed 2020s and $50 cash, it says. Holders accepting before a January 18 early deadline – pushed back from January 11 – get an extra $116 per $1,000, up from the $100 originally offered. The full offer expires January 28. The new 2020 notes to be issued start at a 7.0% coupon, and step up to 8.0% after year one and 9.0% after year two. “Many bond holders who held out on the first offer are likely to accept this one, increasing participation well above the majority required,” Barclays says. The shop values the offer at $69.67, up from $53.25 assuming an exit yield for the new notes at 10%. Axtel has also included clauses allowing it to redeem the 2020 notes. There is currently $275m outstanding in the 2017s and $490m in the 2019s. Axtel has set a limit of issuing up to $357m in the dollar 2020s, up to MXP336m ($26m) in the peso 2020s, and up to $115m in cash. Axtel is rated Caa2/CCC+/B minus.
BdB Seeks Funding Diversification
After a successful and innovative 2012, Banco do Brasil (BdB) will look to diversify its debt funding even more in 2013, and is eyeing another Japanese issuance and new sources including a Chilean huaso bond. “Our strategy has been to build Banco do Brasil’s curve, and now we would like to diversify. Not only with investors, but also geography. We are thinking about doing more in Japan, and are thinking about some alternatives in Latin America. Chile is a good example,” Ivan Monteiro, the bank’s CFO, tells LatinFinance. Hitting these markets would come in addition to planned borrowings in dollars and Euros. Banco Pine opened the Chilean domestic bond market for Brazilian banks last year and others have been tipped to follow. A Japanese sale from BdB this year would follow a successful JPY24.7bn ($315m) 2015 Euroyen deal in 2012. Brazil’s lenders have also been making use of the Dim Sum market. BdB raised about $60m in two Hong Kong offshore RMB-denominated sales last year, and Monteiro says others are a possibility this year. A key for Japan, Hong Kong and other markets is maintaining a long-term presence, he notes. There is no specific timing yet for dollar borrowings, though the official notes conditions are favorable. “The beginning of this year is better if you compare it with 2012. There is a lot of liquidity, but a lot less volatility. That is encouraging a lot of new issuance, at very good prices,” Monteiro says. The pools of liquidity in the US are stronger than ever, thanks to BB’s US operations allowing it to use the 3A2 format. This exception to the SEC process allows for an even broader class of investors than 144a. Monteiro declines to discuss the planned IPO of the BdB Seguridade unit, citing a quiet period. According to regulatory documents, the bank aims to carve out the insurance business entity at some point this year, with the market expecting a BRL5bn ($2.46bn) transaction.
Brookfield Defines Domestic Bond
Brookfield Incorporacoes has determined terms on a BRL300m ($148m) domestic bond sale. The developer plans two tranches, according to regulatory documents. A 2016 portion pays DI plus up to 1.65%. An inflation-linked 2018 piece pays up to 6.10%. It is raising funds to repay debt and for working capital. The size of each is to be determined during bookbuilding, with the issue able to be upsized by as much as BRL105m. JPMorgan and Itau are managing.