Banco Pine has officially opened Pine Securities, its US subsidiary, the Brazilian bank says. Ex-Jefferies banker David Gould joined in July to head the expanded DCM operation from New York and reports to Norberto Zaiet, Pine’s COO. The Brazilian mid-size shop will see its New York broker dealer focus on Brazilian large company research and fixed income securities.
Category: Bonds
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Argentina Vows to Defy Court Order
Argentina plans to challenge a US judge’s ruling in an appeals court, its economy ministry says, after the sovereign was ordered last week to pay $1.3bn to its holdout creditors and not to pay other bondholders until it satisfies this judgment. The government has reiterated its vows not to pay “vulture” funds, but last week’s order could complicate the process by which Argentina pays creditors who accepted its 2005 and 2010 bond swaps. Argentina has coupon payments due in December to these holders. Once Argentine funds reach the US, the court could force Argentina’s agent bank, Bank of New York Mellon, to also pay the holdouts, Nomura says in a report. This would effectively trigger a default since the coupons on the restructured bonds will not be paid in full, the shop says. Options to avoid such a default would include a settlement with the bond swap creditors, making payments in pesos in Argentina or having the case accepted by the US Supreme Court, Nomura says. Bulltick notes the judgment offers a lack of options for the Bank of New York Mellon and other third parties, and says bondholders would likely sue the bank if their payments don’t go through. “This decision goes way beyond Argentina, and creates a very negative precedent for future debt restructurings,” the shop notes. The court had ruled last month that Argentina can no longer discriminate among creditors by only making coupon payments to those who accepted the bond swaps.
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Bancomext Prices Local Bond
Mexico’s Banco Nacional de Comercio Exterior (Bancomext) has priced a MXP2bn ($154m) 10-year domestic bond, according to people following the deal. The sale came at a fixed rate of 5.94%, or Mbonos+50bp, in line with Mbonos+50bp guidance. It was 2x oversubscribed with Afores, insurance and mutual funds driving the majority of the demand. Proceeds will be used to fund the development bank’s portfolio. Banamex and HSBC managed the deal, rated AAA on a national scale. It previously raised MXP1.5bn in 2022 bonds at 5.75% in July.
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Chileans to Headline Busy DCM Week
Chilean retailer Cencosud and pharmaceutical provider CFR have joined the list of borrowers aiming to sell bonds this week, in what should be a busy opening to the final window of cross-border issuance this year. Cencosud is scheduled to meet bond investors today through Wednesday, according to sources familiar with the matter, ahead of an expected $1bn 2022 offering. The Baa3/BBB minus supermarket operator is looking to help fund its recent purchase of Carrefour’s Colombian operations and will visit New York, Boston, Los Angeles, London, Santiago, Bogota and Lima. JPMorgan, BBVA, BNP Paribas, Itau, Mitsubishi-UFJ, Mizuho, and Santander are managing the sale, and are all banks heard participating in the syndication process of a $2.6bn 18-month acquisition loan. Cencosud is also readying a $1.5bn equity capital raise to cover the rest of the takeout, which was approved last week and is expected in December or January. Its last dollar bond was its cross-border debut in January 2011, raising $750m in 2021 notes. Meanwhile, CFR is meeting investors in Europe and the US this week, according to sources familiar with the matter, ahead of what Fitch expects to be a $300m debut bond. After only making its domestic DCM debut this year, the pharmaceutical company now turns abroad for acquisition funding, visiting accounts through Wednesday. JPMorgan and Deutsche Bank are managing the BBB minus/BB+ deal. Proceeds will help fund the $562m acquisition of Colombia’s Laboratorio Franco Colombiano (Lafrancol) agreed in August. CFR raised UF3m ($142m) through a domestic 2033 bond earlier this month. “There is a large pipeline waiting for after the [US] Thanksgiving holidays,” says a New York DCM banker, noting appetite is there at different points on the credit scale. Power plant developer Mexico Generadora de Energia is scheduled to finish meetings Wednesday ahead of a $564m project bond. Mexico’s Posadas should bring a $225m 2017 and Grupo Kuo a $200m 2022 this week, and elsewhere
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Daimler Issues Domestic Debt
Daimler Mexico has issued MXP1bn ($77m) in 2015 floating-rate domestic bonds. The bonds pay the TIIE+35bp, pricing in line with TIIE+35bp expectations. Demand was nearly 2.9x, and driven by mutual funds, insurance, private banking and Afores, according to sources familiar with the sale. Funds raised will be used for general corporate purposes. BBVA Bancomer and HSBC managed the transaction, rated AAA on a national scale and guaranteed by the German parent. Daimler previously came to market in June, when it priced a MXP1bn 2014 bond at TIIE+30bp.
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Interacciones Preps Sub Debt
Mexico’s Banco Interacciones is looking to issue up to MXP700m ($54m) in subordinated bonds in the domestic market, in a deal scheduled for Wednesday. The 10-year notes will represent the third issuance under a subordinated notes program, are eligible for Tier 2 capital treatment for up to MXP2bn, and pay a spread over the TIIE benchmark. Proceeds will be used to maintain liquidity and general corporate purposes. Interacciones specializes in sub-national government and public infrastructure financing. Interacciones is leading the deal, rated Baa1/A on a national scale.
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Odebrecht Closes Tender
Odebrect plans to repurchase $379m of its 7.0% 2020 bonds and $71m of its 6.0% 2023 bonds, it says, following the close of a tender. Holders representing $428m of the 2023s accepted the offer, but the total buyback between the two series had been capped at $450m. The Brazilian builder is paying $1,172.50 per $1,000.00 principal of the 2020 bonds, and $1,190.00 per $1,000.00 principal of the 2023 prior to an early deadline, and $1,160.00 after. There was $800m outstanding in the 2020s and $500m outstanding in the 2023s prior to the offer. The repurchase is funded by the October reopening of $450m in 2042 bonds. The Baa3/BBB minus 7.125% coupon notes reopened at 116.266 to yield 5.950%. Bradesco, BNP Paribas, Banco do Brasil, Citi and Mitsubishi-UFJ managed the reopening and the tender.
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US Shops Lead DCM into Home Stretch
Heading into what could still be a very active final few weeks of 2012, JPMorgan leads the DCM league tables for LatAm cross-border issuance, while Citi is on top when both local market and cross-border transactions are included, according to Dealogic data. The region as a whole had issued $142.24bn total through Tuesday from 344 deals, including $110.50bn from 173 cross-border transactions. Both marks have already passed 2011’s respective $134.21bn and $94.89bn full-year totals to set new records. “There remains a lot of liquidity in the market, and it is there for investment-grade issuers and also moving down the credit spectrum,” says a senior banker at one of the top shops. Of the cross-border total, $20.3bn has come from double and single-B issuers, down from $32.7bn in the corresponding period in 2011 and reflecting the large portions of 2012 that were closed to lower-rated credits. In the overall rankings, JPMorgan has booked $13.51bn from 46 deals in the cross-border space, to lead HSBC ($12.94 from 51) and Citi ($12.71bn from 47). When domestic market transactions are added, Citi’s $18.73bn from 89 deals put it ahead of HSBC ($15.78bn from 82) and JPMorgan ($13.58 from 49). Bankers, already anticipating the traditional January rush, still see a few weeks of activity starting Monday. In the high-yield space, Mexicans Posadas (planning a $225m 2017) and Grupo Kuo ($200m 2022) are preparing issuance for next week, as is Colombia and Brazil-focused driller Tuscany International ($200m 2019). Grupo Mexico’s Mexico Generadora de Energia is testing the project bond market with a $564.2m 2032, and Cencosud is set to bring a $1bn 2022. In the sovereign space, El Salvador is expected this month with what should be a $500m-$800m 10-year.
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Chilean Readies Bonds
Chile’s Consorcio Financiero is in the process or registering to issue a domestic bond sale of up to UF6m ($286m), with possible tranches up to 10 and 30 years. The non-bank institution specializing in consumer credit and insurance is looking for funds for investments and the payment of liabilities. Celfin is managing the sale, rated AA/A minus on a national scale. The sale had initially been considered for December, according to people familiar with the process, though a number of issuers expected with deals prepared for November are watching the markets and may hold off until conditions improve. In October, Consorcio raised $271m-equivalent to finance the expansion of its subsidiaries. The company is targeting an IPO in 2016.
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Inbursa Preps Domestic Debt
Inbursa plans to issue up to MXP8bn ($615m) in the Mexican domestic bond market on November 28, according to sources familiar with the transaction. The Carlos Slim-owned lender is preparing to issue 2 and 4-year floating rate notes paying a spread over the TIIE benchmark, with the 2-year portion allocated a larger size. Inbursa, Banamex, Bancomer, HSBC and Banorte-Ixe are managing the transaction, rated AAA on a national scale. Inbursa last issued in October, selling MXP5bn in 2015 floating-rate bonds paying TIIE+25bp.