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+.
Category: Bonds
Posted inDaily Brief
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.
Posted inDaily Brief
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.
Posted inDaily Brief
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.
Posted inDaily Brief
Localiza Clinches Domestic Bond
Brazilian rental car company Localiza has finalized the sale of BRL300m ($148m) in domestic bonds, according to Anbima. The 2019 debenture pays DI+0.95%, and amortizes beginning in year four. Caixa and Banco do Brasil managed the sale, done under the rule 476 restricted format. Localiza is rated AA+/Aa1. Earlier this year, Localiza tapped the debenture market for BRL500m.
Posted inDaily Brief
Odebrecht Tender Gets Strong Response
Holders of $379m of Odebrecht’s 2020 bonds and $428m of its 2023 bonds have accepted a cash tender offer, the construction company says, exceeding a combined $450m limit. Accepting creditors get $1,712.50 per $1,000.00 principal of the 2020 bonds, in an offer that expired Wednesday. For the 2023s, holders receive $1,190.00 per $1,000.00 principal of the 2023 prior to Wednesday’s early deadline, and $1,160.00 after, until a November 19 final deadline. There were $800m outstanding in the 7.0% 2020s and $500m outstanding in the 6.0% 2023s. 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, and Citi and Mitsubishi-UFJ managed the reopening and are handling the tender.
Posted inDaily Brief
Peru Housing Fund Eyes Bond
Peru’s Fondo Mivivienda is heard awarding a mandate for a potential international bond transaction, according to a source familiar with the state housing fund’s plans. An official announcement has yet to be made, but Citi is considered one of the top contenders for the business. Fondo Mivivienda engages in development of the Peruvian housing market, finances homeownership through financial institutions and manages allocation of subsidies for families to have access to homeownership. An international bond would be a debut, according to Dealogic data.
Posted inDaily Brief
Veracruz Targets November Securitization
The Mexican state of Veracruz is preparing to raise up to MXP6.9bn ($540m) through a securitization of future federal payment flows, according to a person familiar with the sale. The domestic market bonds are tentatively scheduled to price November 9, after the state initially targeted an October sale. Veracruz plans three separate tranches of MXP2.3bn each – a 15-year fixed-rate peso-denominated tranche with an 11-year average life, a 15-year peso floating-rate portion with an 11-year average life and a 25-year UDI-denominated tranche with a 19-year average life. The bonds feature a guarantee from development bank Banobras for up to 45% of the total size per tranche. Proceeds will be used for part of the state’s MXP30bn refinancing plan, as it seeks to refinance liabilities and improve its debt profile. Banamex, Banorte-Ixe and BBVA Bancomer are managing the deal, rated AA/AA+ on a national scale.
Posted inDaily Brief
Ample Space for Private Financing: Coutinho
There will be plenty of room for private sources to fund a coming “big wave” of infrastructure investment in Brazil alongside BNDES, Luciano Coutinho, the state development bank’s president, tells LatinFinance. “The main hindrance for the big participation of private forces in long-term finance was the very high short-term interest rates in Brazil. Turning this page was the big novelty. This idea that the BNDES is ‘crowding out’ usually comes from economists that do not know how the market works,” the official says. Coutinho explains the share of financing for infrastructure based on financial instruments will grow fast in the coming years, and reach “at least 20%-30% of the long-term financing market,” now that Brazilian investors are forced to diversify investment away from government paper. “In this way, BNDES’s absolute size will not shrink because the overall pie is growing. But almost all the addition of demand, the financial expansion, must be met by the market,” Coutinho says. The bank will seek ways to share financing of large individual projects. “Initially we will try at the minimum of 10%–15% or even more if the market has the appetite for the projects, either through long-term bonds or long-term credit. We’re also engaged in structuring infrastructure funds… we can be a minority partner, taking 10%-15% position in funds, so as to help the investment banks to structure private equity or other funds,” he says. Legislation such as that creating infrastructure debentures, as well as a PPP concession model successful in the electricity sector that can be applied to other areas, are other developments that should lure more private investment. Brazil must add another $40bn-$50bn per year in infrastructure investment, brining the total from 19% of GDP to 21% or more, Coutinho says.
Posted inDaily Brief
Brazilian Sets Price Target
Usina Sao Joao Acucar e Alcool (USJ) is aiming for a yield in the mid-10% range for a debut 2022 bond, according to investors. The Brazilian sugar and ethanol producer met with potential buyers in Europe, Latin America and the US, and was heard opting for an investor call with west coast accounts on the last day of its 4-day roadshow. Timing is unclear due to weather-related complications in the Eastern US, as is the case with other cross-border bond deals that were on the road this week. The issuance should be $200m-$300m size, according to a banker familiar with the sale. Credit Suisse, HSBC and Itau are managing.