Santander Mexico is heard aiming for a yield of UST plus high 200bp for a new 10-year benchmark bond, according to a person familiar with the sale. The bank has wrapped up fixed-income investor meetings, and is expected to price as soon as today. The Mexican lender is planning up to $1bn for its planned 10-year senior unsecured bond sale, S&P says while assigning a BBB rating. Deutsche Bank, Goldman Sachs and Santander are managing.
Category: Bonds
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Southern Copper Headlines DCM Rush
Peru’s Southern Copper (SCC) raised $1.50bn on a day that saw $4.55bn in LatAm DCM issuance, as the backlog caused by last week’s severe weather in the US was cleared. Facing 2Q numbers going stale and today’s US elections, several issuers who met investors last week were eager to get their deals out the door. “It sounds cliche, but the market has a lot of cash to put to work and anything down the middle in terms of risk is doing pretty well. We’re seeing a lot of supply and will continue to do so in the coming weeks with little windows of stability,” says an EM-focused fund manager perusing Monday’s various offerings. SCC picked up with plans it put off for a dual-tranche issue in September, funneling most of the funds into a $1.3bn 2042 bond and continuing the trend of LatAm issuers locking in low rates for the long-term. A $300m 2022 priced at 99.657 with a 3.500% coupon to yield 3.541%, or UST+185bp, tight to 200bp-area guidance that followed low 200bp price talk. The$1.2bn 2042 priced at 98.207 with a 5.250% coupon to yield 5.371%, or UST+250bp, at the tight end of 260bp-area guidance that followed mid-to-high 200s price talk. The 10-year level was seen coming versus a G-spread of about 215bp for the issuer’s outstanding 2020 bond, with the issuer’s outstanding 2040 trading at about 260bp prior to launch. The Baa2/BBB/BBB Peru-based unit of Mexican miner and railroad operator Grupo Mexico saw $7bn in demand, slightly more of which fell into the long tranche, according to bankers on the deal. More than 250 accounts bought the 10-year, and more than 200 played in the 30-year. The bulk of buyers came from the US and Europe, with some participation from LatAm-based investors. Bank of America Merrill Lynch, Credit Suisse, HSBC and Morgan Stanley managed the sale. SCC cancelled a roadshow in September following the announcement of a US court judgment against Grupo Mexico. It raised $1.5bn in 2020 and 2040 bonds in April 2010.
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Winery Preps Domestic Bond Issue
Vina Concha y Toro will look to tap Chile’s local bond market on November 14, raising up to UF1.5m ($71m) to refinance short-term debt. The Chilean winemaker can choose from a 6-year UF-denominated tranche with a 3-year grace period and 3.50% coupon, a 12-year UF tranche with a 2-year grace period and 3.60%coupon, and a 12-year UF tranche with a 7-year grace period and 3.60%coupon. Banchile-Citi leads the deal, which held its roadshow last week. Concha y Toro is rated AA/AA minus on a national scale.
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Daimler Looks to MXP Sale
Daimler Mexico is planning to issue up to MXP2.0bn ($153m) in 2016 floating-rate domestic bonds November 21, according to a regulatory filing. BBVA Bancomer and HSBC are managing the car manufacturer’s sale, rated AAA on a national scale. Daimler last came to market in June, when it priced a MXP1bn 2014 bond at TIIE+30bp.
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DF Preps Domestic Debt
The government of Mexico’s Distrito Federal will look to issue up to MXP2.0bn ($153m) in the domestic bond market in the third week of November, according to sources familiar with the plans. Guaranteed by the federal government, the 15-year bond is rated AAA on a national scale. Banorte-Ixe and Santander are managing the transaction. In December of last year, the district’s government sold MXP1.77bn in 5-year bonds at TIIE+30bp.
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Mexican Toll Road Eyes Local Debt Market
The Monterrey-Saltillo toll road plans to raise up to MXP4.5bn ($345m) in Mexico’s domestic bond market the week of November 19, according a source familiar with the transaction. The concession is looking to offer UDI-denominated notes with a maturity of approximately 25 years, with proceeds repaying bank loans and subordinated debt with the government Fonadin fund. The toll road, owned by Spain’s Isolux-Cosan, has been operational for almost a year. Santander, ING and Bank of America Merrill Lynch are bookrunners on the transaction, rated AA/AA+.
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Brazilian Clinches HY Bond
Following a brief shutdown in the cross-border bond market last week, Usina Sao Joao Acucar e Alcool (USJ) has emerged, generating a $870m-plus book on a $275m 2019 NC4 bond. The Brazilian debut high-yield issuer priced at 98.768 with a 9.875% coupon to yield 10.125%, at the tight end of 10.375% guidance and mid-10% area whispers. “Good for investors getting a 10.125% yield, and as for the company, they were trying to extend maturities and willing to pay to extend debt of high yield secured terms with longer-term unsecured high yield debt. This is the right trade for them, as this will liberate the company and allow them to focus on their business plans,” says a DCM banker away from the BB minus/BB minus sale. He notes USJ coming at around 100bp inside B3/B/B rated peer GVO’s NC4 $300m 2018 bonds, trading to yield around 11%. The sugar, ethanol and bioenergy producer plans to use proceeds fro the sale to refinance up to 100% of existing short-term debt and up to 60% existing long-term debt and general corporate purposes. Credit Suisse, HSBC and Itau managed the transaction. This week could now see a flurry of new issuance activity, after several borrowers were on the road last week. Queiroz Galvao Oleo e Gas was targeting a $500m 2019 bond, at perhaps UST+500bp. Fellow Brazilian Sifco was to wrap up a roadshow Friday supporting a $200m liability management operation, swapping 2016 bonds for 2018, and Cielo is on the road this week ahead of an expected $750m-$1bn sale. Peru’s Southern Copper and Santander Mexico were also on the road last week, with the latter eyeing a 10-year benchmark.
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Brazilians Lead Borrowers Back into Action
The cross-border debt capital markets continued to show signs of revival following disruptions to the US markets earlier this week, with Usina Sao Joao Acucar e Alcool (USJ) set to price a new bond as soon as today, and fellow Brazilians Cielo and Marfrig heading out to visit investors. USJ has revised yield guidance from mid-10% range to 10.375% for a 2019 NC4 expected to be $200m-$300m, according to sources familiar with the sale. Credit Suisse, HSBC and Itau are managing the BB minus/BB minus transaction. Credit card payment processor Cielo is set to go on a roadshow that is likely to precede a debut benchmark-size bond. It is targeting $750m-$1.0bn, according to Fitch and Moody’s, which assign respective BBB+ and Baa2 ratings to the deal widely expected since the $670m acquisition of US payment processor Merchant e-Solutions in July. Proceeds are destined for debt refinancing and for general corporate purposes. Cielo is scheduled to see accounts beginning in London on Monday, followed by visits to Boston Tuesday, New York Wednesday, and the US West Coast on Thursday. Banco do Brasil, Bradesco and Goldman Sachs are managing. Meanwhile, B2/B+/B+ meatpacker Marfrig is meeting bond investors in the US and London through Monday, on a non-deal basis with Bank of America Merrill Lynch. Marfrig was last in the bond market in May 2011 when it raised a $750m 2018 bond to yield 8.6%. It is also preparing a BRL1.27bn ($626m) equity follow-on, expected to price later this month through BAML, Bradesco, Banco do Brasil, Deutsche Bank and Itau. Others who are in the pipeline to price cross-border bond deals once issuance resumes include Southern Copper, Queiroz Galvao Oleo e Gas, Santander Mexico and Sifco.
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Copel Completes Debenture
Companhia Paranaense de Energia (Copel) has completed the sale of BRL1bn ($493m) in Brazil’s domestic bond market, according to Anbima. The 2017 debenture pays the DI+0.99%, and amortizes in two equal installments in 2016 and 2017. Copel plans to use proceeds for investments and working capital. Banco do Brasil managed the transaction, done under the rule 476 restricted format.
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DASA Wraps up Local Debt
Diagnosticos da America (DASA) has raised BRL250m ($123m) in Brazil’s domestic debt market, according to Anbima. The 2016 bond pays the DI+0.80%, and amortizes in four equal installments during the final four years. The Brazilian medical services company is raising funds to repay shorter-term debt and for working capital. Banco do Brasil managed the sale, done under the rule 476 restricted format.