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.
Category: Bonds
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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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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.
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Water Utility Plans Debentures
Companhia Catarinense de Aguas e Saneamento (Casan) plans to raise BRL100m ($48m) in Brazil’s domestic bond market, it says. The Brazilian water utility plans a 2022 inflation-linked debenture paying 9.5%. Caixa Economica Federal and Credit Suisse have been hired.
Proceeds from the sale, to be done under the rule 476 restricted
format, will be used to cover a cash flow deficit.
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Watt’s Chews on Issue Plans
Watt’s will look to issue up to UF1m ($48m) in Chile’s local bond market, according to company documents, in a deal expected Tuesday. The food company can choose between a 5-year UF tranche with a coupon of 3.7%, a 10-year UF bullet tranche with a coupon of 3.9%, and a
20-year UF tranche with a coupon of 4.2%. The company is heard preferring the longer tenors, says a person familiar with the plans.
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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AMX Looks for Global Peso Retaps: CFO
America Movil (AMX) will look to reopen its new 2022 bond multiple times, building a sizable curve in the peso-denominated securities sold seamlessly to both international and domestic investors, its CFO tells LatinFinance. “We intend to tap the bond for 1.5 to two years before we issue a new 10-year bond. At the end of the five years we will have a very well-defined yield curve, in which the bonds outstanding will be $2bn-$3bn-equivalent in size,” Carlos Garcia Moreno says. The Mexican telecom’s plan is to stick to 10-year bonds, the maturity offering the best overlap between locals and internationals. Wednesday’s MXP15bn ($1.15bn) sale of Titulos de Credito Extranjeros, as the securities are known, drew more than MXP50bn in total demand. The official says about 35% of the deal was allocated to LatAm investors including Mexicans, Chileans, Peruvians
and Brazilians. US buyers accounted for 56% and Europeans 9%. The Mbonos+93bp (6.45%) price compares to the dollar curve being at about 75bp-80bp after swapping, Garcia Moreno says. The new bonds tightened to around Mbonos+70bp Thursday. The issuer did not elect to exercise a greenshoe option early Thursday morning, he says. The motivation for the program was simple, Garcia Moreno explains, with the issuer wanting more peso debt following the integration of Telmex and other units into AMX, but without the liquidity constraints it found in its previous Europeso issuances. The key was achieving diverse investor base, he says, not just in terms of geography, but also in terms of investor types. The format of Wednesday’s sale allows for greater control of allocation. Going forward, AMX could retap as frequently as once per quarter. The same six banks – HSBC, Deutsche Bank, Morgan Stanley, BBVA, Citi and Credit Suisse – will handle the issuances going forward under the five-year MXP100bn program, rotating between active and passive roles. “There are other entities in Mexico that could use this
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Argos Issues Convertibles
Colombia’s Grupo Argos has issued COP750bn ($413m) in 3-year convertible bonds in the domestic market. The Colombian conglomerate upsized the sale by COP250bn, after getting COP759bn in demand. The bonds have a 5% coupon and are convertible into preferred shares at
the holder’s discretion during the life of the bond, and mandatorily at maturity. Bancolombia led the deal, rated AA+ on a national scale, with Bolsa y Renta, Corredores Asociados, Correval and Serfinco as bookrunners.
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Cencosud Bags Acquisition Funds
Investors put in more than $8.5bn in orders for Cencosud’s 2023 bonds, allowing the Chilean retailer to upsize the new issue to $1.25bn from a planned $1bn. Fresh off of a $2.6bn cross-border acquisition that made it Colombia’s second-largest retailer, the operator of supermarkets, hypermarkets, and other retail operations is raising funds to take out an 18-month bridge loan. The Baa3/BBB minus bond priced at 99.062 with a 4.875% coupon, to yield 4.993%, or UST+337.5bp, tight to 340bp-350bp guidance revised from a 362.5bp-area level that followed 375bp-area initial talk. The bonds were trading up 0.375 points in the grey, according to traders. “The deal offered 25bp to existing 2021s,” says a New York-based investor citing fair value. Leads spotted the 2021s at 4.60% yield pre-announcement. Some investors expressed concern on the issuer’s negative outlooks placed on its credit ratings, though during the roadshow Cencosud’s management was heard stressing its commitment to keeping credit metrics in line with an investment grade profile. Initiatives include a $1.5bn equity capital raise, to be completed by January, and capex reduction, among other initiatives to reduce leverage. Some 400 accounts participated in the deal. JPMorgan was global coordinator and joint bookrunner with BBVA, BNP Paribas, Itau, Mitsubishi UFJ, Mizuho and Santander as joint bookrunners. Cencosud agreed to buy Carrefour’s Colombian operations last month for $2.6bn. With bond debt remaining cheap and many large cash-flush LatAm corporates looking for acquisitions, bankers expect bond market takeouts of short acquisition loans to become more common in 2013.