Brazil’s Desenvix is aiming to finish pricing a BRL100m ($48m) bond in the domestic market by December 11, according to regulatory documents. A roadshow is due to end this week. The 2016 debenture is expected to pay the DI plus up to 2.8%. The renewable energy developer is raising funds for working capital, repaying debt and capex. Banco Fator is managing. Desenvix is rated A2 on a national scale.
Category: Bonds
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Fibria Eyes LM, Return to High Grade
Brazil’s Fibria is aiming to get its leverage below 3.0x by the end of next year, in order to set up a possible upgrade to investment-grade status, its CFO says, with additional liability management operations in the cards for 2013. “We continue to pay down debt. We are not going to issue additional debt. You will see more debt repayment, and we are monitoring the markets for liability management,” Guilherme Cavalanti tells LatinFinance. The pulp and paper producer is also looking at selling some additional assets – likely smaller in size than those it has parted with in the past few years as part of its deleveraging process. It may also consider sale-leaseback as an alternative for properties, if the proper partner can be found at a cost effective price. “With interest rates lower, [Brazilian] pension funds could look to investing in land as an alternative,” the official says. After completing a $514m tender offer for 2020 bonds in July, Fibria is eyeing other liability management operations ahead, also funded with free cash flow, though Cavalcanti declines to give details on timing or which outstanding bonds may be targeted. He expects free cash flow to be sufficient for such operations next year, and industry prices to be more stable, despite recent analyst projections. Fitch noted last month that a weak outlook for the pulp and paper sector could prevent Fibria from further deleveraging with its operating cash flow. A headwind for the sector should come from global market pulp capacity expanding by 8% during the next 12 months while demand grows by just 2%–3%, Fitch says. Fibria’s net debt should be at BRL8.0bn ($3.86bn) once the BRL615m sale of its Losango forest assets to Chile’s CMPC closes this month, Cavalcanti says. Net debt to Ebidta was 4.2x at Q3, and the company expects it to hit 3.5x by the end of the year on route to the 3.0x target that would please ratings agencies, perhaps in 2014. Fibria is now BB+/Ba1/BB. Only after returning to triple-B status
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Infonavit Works on New RMBS
Mexican mortgage and social services entity Infonavit plans to raise up to MXP3.0bn ($231m) in UDI-denominated RMBS in the domestic market in January. The 28-year paper will be backed by Infonavit’s mortgages. Banamex and HSBC are managing the new transaction, rated AAA on a national scale. Infonavit – through its Infonavit Total unit – last sold MXP1.97bn in UDI-denominated 2040 RMBS bonds in early June, pricing them at 4.20%, via Banamex and Bancomer.
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Paraguayan Telecom on the Road
Telefonica Celular del Paraguay (Telecel) is meeting fixed-income investors this week in Europe, Latin America and the US, testing the market for what would be a debut international bond transaction. Telecel operates under the Tigo brand name and is a subsidiary of Millicom International Cellular, a mobile telephony and internet company in 14 markets across Latin America and Africa. It is visiting Los Angeles, New York, Boston, Lima and London through Wednesday, accompanied by Citi and Morgan Stanley. Telecel is expected to be rated BB.
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Watt’s Ready to Roll
Watt’s is expected to issue up to UF1m ($48m) in Chile’s local bond market today, according to sources familiar with the company’s plans. The food company is likely to issue a 20-year UF-denominated tranche with a coupon of 4.2%, having been heard preferring the longer tenor to its other shorter options. The proceeds will be used to refinance liabilities. LarrainVial is managing the deal, rated A/A on a national scale. The company’s board authorized a bond shelf of up to UF6m in March 2011. In May 2011, Watt’s sold UF1m in 5-year bonds at a 3.48% yield, and UF1m in 20-year bonds at a 3.88% yield.
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Belize Adjusts Restructuring Offer
Following upward adjustments to Belize’s medium-term fiscal projections and a freeing up of additional resources, the government has revised the indicative debt restructuring offer it pitched in August, as it continues dialogue with holders of its 2029 Superbonds. The sovereign revised two scenarios for its par and discount bonds, it says, offering a smaller haircut, shorter maturity and higher coupons. The government now offers one scenario with no reduction in principal, a 10-year grace period, 2052 maturity, and 2.75% coupon for five years and 4.5% thereafter – altering the previous 15-year grace period, 2.0% coupon and final maturity of 2062. A second possibility entails a 33% haircut, 5-year grace period, 2042 maturity and 4.5% coupon for five years and 6.75% thereafter – altering the previous 45% haircut and 3.5% coupon. A third scenario pitched in August, also involving a 45% haircut, was not addressed. “The terms are less severe than the ones set out last August, namely, shorter grace periods, less duration extension and higher coupons. As such, there is a meaningful increase in the valuation of the [government’s] proposal, particularly in the case of the par option,” Nomura says in a report. An ad-hoc group of bondholders representing at least $200m of the debt had sent a counter proposal to the government’s initial scenarios offering three alternative scenarios based on par structures. Their three alternatives involve a return to the current 8.5% coupon upon the expiry of the reduced coupon period, required terms which include issuance of GDP warrants and oil recovery certificates, inclusion of net present value reinstatement clauses, and payment of consent fees to participating creditors. “While acknowledging that the committee’s counter proposal provides a degree of short-term cash flow relief, the government considers it to be wholly incompatible with its objective of placing the country’s debt burden on a sustainable footing,” the government says.
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Interjet Preps Domestic ABS
Mexico’s Interjet is preparing to issue up to MXP2bn ($154m) in asset-backed bonds in the domestic market on Tuesday. The 5-year floating rate bonds have a 2.5 year average life are backed by credit card receivables from airline ticket purchases – which constitute 60% of sales. The airline aims to price in the TIIE+250bp-270bp range. Bank of America Merrill Lynch is leading the transaction, rated AA minus on a national scale.
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TGP Plans Cross-border Bond Debut
Transportadora de Gas del Peru (TGP) is heard out with an RFP for a new bond, according to DCM bankers, which would represent its first international sale. The would-be issuer is heard to seek around $300m, though some suggest the deal could be larger, perhaps one of the largest transactions seen out of Peru. The request has gone out to a group of banks, a source at one of which says the RFP deadline is Thursday. TGP raised $150m in 15-year domestic bonds in 2010.
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Tuscany Extends Meetings
Tuscany International Drilling’s fixed-income meetings are spilling into this week, as the issuer plans additional discussion ahead of an expected debut bond offering. The Canada-based land drilling services provider predominantly operating in LatAm maintains initial price thoughts of low 10%-area and aims to price a $200m 2019 NC4 bond this week, following fixed-income meetings in Canada, Latin America and the US. The notes will be guaranteed by five of Tuscany’s subsidiaries and proceeds will be used to repay all senior secured term loans outstanding under its existing credit facility and for general corporate purposes. Approximately 60% of Tuscany’s fleet is concentrated in Colombia and Brazil. Credit Suisse and Scotia are managing.
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EFE Issue Chugs Forward
EFE will look to issue up to UF7.8m ($370m) in Chile’s local bond market on December 6, say sources familiar with the state railway company’s plans. It can choose from a 21-year UF tranche with a 15-year grace period and 3.7% coupon, and a 25-year UF bullet tranche, also with a 3.7% coupon. Banchile-Citi is managing the transaction, rated AAA on a national scale and guaranteed by the state. EFE last issued in the domestic bond market in 2006.