Brazil’s America Latina Logistica Malha Norte (ALL) has sold BRL160m ($79m) in domestic bonds, it says. The 2020 bullet pays 10.10%. Caixa managed the sale, done under the rule 476 restricted format.
Category: Bonds
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AutoBan Completes Debenture
Brazil’s AutoBan has completed a BRL1.1bn ($539m) domestic bond sale that includes a tranche qualifying as an infrastructure debenture, according to the CVM, becoming the first widely-marketed deal to take advantage of the legislation allowing tax exemptions to investors. The toll road operator owned by Companhia de Concessoes Rodoviarias (CCR) had tightened pricing from initial expectations and upsized the 2017 debenture from BRL950m during bookbuliding last week. A BRL965m tranche pays 109% of the DI, inside of a 109.2% ceiling, and amortizes 4x annually beginning 2015. A BRL135m bullet inflation-linked tranche qualifying under the infrastructure law pays 2.71%, set to the yield of the government NTN-B bond plus 0.0%, in from an NTN-B plus 0.25% limit. Proceeds will go towards debt repayment and projects. As with most of the early sales using the infrastructure debenture format, AutoBan’s sale was directed entirely to Brazilian buyers, with DCM bankers expecting international participation only after the asset class has developed somewhat. Banco do Brasil, Caixa and HSBC managed the sale, rated AAA on a national scale.
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Caixa Preps Investor Meetings
Brazil’s Caixa Economica Federal is scheduled to meet bond investors this week, ahead of what would be an international bond debut. The state-owned lender will visit the US, Europe and Asia Tuesday through Thursday. Bank of America Merrill Lynch, Deutsche Bank and HSBC are managing the process. Caixa is rated BBB.
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Cencosud Plots Acquisition Debt Takeout
After announcing the $2.6bn acquisition of Carrefour’s Colombian operations Thursday, Cencousud plans to access both the bond and equity markets to help fund the purchase. The Chilean supermarket operator signed a $2.5bn 12-18 month bridge loan from JPMorgan, which it will seek to replace. To do so, Cencosud plans a $1.5bn equity capital increase and the issue of $1bn 10-year bonds in the international market. The equity sale should occur within four months and the bond sale within three, according to remarks from company officials cited in local news and wire reports. The equity sale would come after a $1.23bn follow-on completed in June. The retailer’s last visit to the international bond markets came in early 2011. It sold $750m in 2021 bonds at a 5.661% yield, with 3.5x demand, through Deutsche Bank, JPMorgan and Santander. Fitch has placed Cencosud’s BBB minus rating on negative watch following Thursday’s purchase. Barclays calls the acquisition “credit negative,” seeing it as expensive by traditional metrics, and expresses concern about increased leverage. “The pressure for companies to act on buying opportunities even if their balance sheets are already stretched is a reality of the hyper-competitive food retail sector, but we do not believe bonds fully reflect these risks,” the bank says.
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DF Aims for Local Bond
The government of Mexico’s Distrito Federal will look to issue up to MXP2bn ($155m) in the domestic bond market, according to sources familiar with the plans, likely pricing near the end of November. Guaranteed by the federal government, the issue is rated AAA on a national scale. Banorte-Ixe and Santander are managing the transaction. In December of last year, the government raised MXP1.77bn through a sale of a domestic bond, pricing 5-year floating rate notes at TIIE+30bp.
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Government Intervenes in Brazilian Bank
Brazil’s central bank has taken control of Banco BVA, it says, after finding violations of industry standards and deteriorating finances. The bank was in need of around BRL1bn ($493m) in capital, according to local news and wire reports, and was unable to find a buyer. The move follows the liquidation of Cruzeiro do Sul last month, and makes BVA the fifth bank seized by Brazilian regulators since 2010. As with Cruziero, the impact on the system is expected to be limited. “This is a small bank that focused on middle market lending whose total assets represented less that only one-fifth of 1% of overall banking system’s assets. This should not be viewed as a systematic problem, but as an isolated event from which we expect no ripples,” Fitch says in a report. The government intervened in the mid sized lender due to “the deterioration of its economic and financial situation and the violations of norms that discipline the institution’s activity.†BVA has 0.17% of the Brazilian banking system’s assets and 0.24% of its deposits, and operates in Rio de Janeiro, Minas Gerais and Sao Paulo.
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Smaller Sovereigns Line Up to Tap Demand
A group of the LatAm’s smaller sovereign issuers have their eyes on the international bond markets, likely following a transaction from Bolivia expected as soon as today. Investors anticipate a 5.0%-6.0% yield for the Ba3/BB minus/BB minus Andean credit, and the buyside is interested in seeing more borrowers take advantage of favorable issuing conditions. “Anyone with plans to issue next year should get some or all of it out of the way now. We seldom see yields this low,” says a London-based EM portfolio manager. He notes the window could well stay open for another 6-12 months, but rates are not likely to get much lower than they are now. With the highest-quality LatAm sovereigns tightening to impressive levels – such as Brazil’s 10-year at around UST+70bp – buyers would be keen on the higher-yielding sovereigns, he explains, though Brazil and its sub-sovereigns would be smart to issue now as well. Costa Rica has named Citi and Deutsche bank to manage an upcoming bond sale, with the sovereign aiming to start investor meetings by the end of the month. The government – absent from the bond market since 2004 – is authorized for a $4bn program and limited to $1bn per year. Finance minister Edgar Ayales says the Baa3/BB+/BB+ borrower is hoping to price in the 4.00%-4.25% yield range and plans a 10-year but does not rule out a longer maturity. El Salvador has received approval for an $800m international bond to prepare for a put option for investors to redeem 2023 bonds next year. Nomura calls the exercise of the option “highly unlikely” given that the 7.75% coupon bonds trade at a 119.50-120.50 dollar price. The bank estimates Ba2/BB minus/BB minus El Salvador could come to market for 30-year bonds at around 6.50%. Others are also looking. A new issue in 2013 may be in the cards for Guatemala, Maria Concepcion Castro, its vice minister of financial administration, tells LatinFinance. Attractive rates and creating a reference point for Guatemalan corporates are among the
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Telecom Upsizes Local Bond
Companhia de Telecomunicacoes do Brasil Central, known as Algar Telecom, has upsized a domestic bond sale to BRL274m ($135m) from BRL220m, according to regulatory filings. A BRL61m 2017 tranche pays the DI+1.4%, in from a DI+1.5% ceiling, and a BRL213m 2029 inflation-linked tranche pays 6.0%, inside of a 6.6% limit. Algar is raising funds to repay debt and for working capital. Banco Votorantim, Itau and Santander are managing the sale. Part of the Algar Group, Algar Telecom offers telephone, cellular, cable television and data service in six Brazilian states.
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Banco Industrial to Visit Buyside
Guatemala’s Banco Industrial plans to meet bond investors Monday through Wednesday of next week. The tour is to include stops in the US, Europe and LatAm. Bank of America Merrill Lynch and Citi are managing. The BB/BB/Ba2 bank last issued in July 2011, raising a $150m 10-year subordinated Tier 2.
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BR Malls Retaps Perp
BR Malls has raised $175m through a reopening of its 8.5% NC5 perpetual bond, in order refinance its 9.75% perp callable next year. The shopping mall developer and manager reopened the bond at 108.50, following 108.25-area initial talk, to yield 7.834% to maturity, and 5.62% to the call. Demand was heard to be around $1bn. BTG Pactual and Deutsche Bank managed the sale, rated Ba1/BB. The bond was originally sold in 2011 and now has $405m outstanding. It is the region’s first perpetual sale since a $250m sale from Magnesita in March. BR Malls brings the deal amid a relatively slow week in the DCM. Investors await a likely $500m 10-year from Bolivia, and Santander Chile is working out an offshore RMB deal in Hong Kong.