Colombia jumped out into the international market Friday with a COP1trn ($559m) 2023 bond, a move that allowed the republic to print its second largest-ever global TES issue and attain its lowest coupon for a local currency denominated issuance. “After this week’s developments we thought it was perfect timing to issue a TES at appropriate levels. Pricing at 4.5% shows an important vote of confidence from international investors for our economy and country,” Maria Fernanda Suarez, Colombia’s public credit director, tells LatinFinance. Suarez says the deal offered investors a 20bp-25bp concession, with Colombia’s existing 2021 TES trading in the low-4.0% area Friday. The new bond priced at 98.995 with a 4.375% coupon to yield 4.500%, in line with 4.500%-area guidance following mid 4.000%-area whispers. Suarez notes the 2023 priced 200bp inside the local TES curve, and 25bp inside of the Colombian central bank overnight lending rate of 4.75%. “[The deal represents] good value to a slightly expensive curve,” says a London-based investor following the deal. “Issuing in Global TES makes sense as it reduces currency appreciation pressures for investors who would like to invest in the local market,” says Nomura strategist Benito Berber. The sale drew 2x demand from 70 accounts, with the top 10 accounts putting in for $400m in orders, according to bankers on the deal. The transaction allowed the sovereign to complete the $500m left under its $2bn financing plan for 2012. Bank of America Merrill Lynch and Morgan Stanley manged the sale, rated Baa3/BBB minus. Colombia remains committed to keep its benchmarks both in TES and USD and while a dollar transaction is not imminent, Colombia continues to closely monitor the dollar markets and foresees its next transaction in USD, Suarez says. “The issuance matches Colombia’s financing plans perfectly and matches the maturity of a bond due early next year, but it doesn’t match the liquidity of other TES bonds,” Berber says. He adds
Category: Bonds
ISA Considers Refi
Colombia’s ISA could look to refinance at least $300m of debt tied to its Peruvian operations through a transaction in the international markets, CFO Camilo Barco tells LatinFinance. He expects his company would generate substantial investor interest, based on a flight to quality mentality among buyers and the perception of ISA as a low-risk name in a popular sector. ISA, which operates in Brazil, Peru, Chile, Bolivia, Ecuador, Argentina and Central America, last issued bonds in December of last year. The $154m-equivalent sale included 12 and 30 year domestic notes.
Mexichem Tops 75% in Tender
Mexichem has received acceptance from holders of $267m or 76.32% of its $350m outstanding 8.750% 2019 bonds, it says, in a tender offer closed last week. In addition, the chemicals producer has received the minimum consent needed to eliminate restrictive covenants. Mexichem offered holders $1,245 cash per $1,000 principal, which includes $30 for adopting proposed covenant amendments. The tender is funded by last week’s well-bid sale of 10 and 30-year bonds. The sale included $750m in 4.875% 2022 bonds priced at 5.000% yield and $400m in 6.750% 2042 bonds priced at par. Mexichem amassed about $17bn in total orders. Citi, HSBC, JPMorgan and Morgan Stanley led the tender offer and the last week’s bond sale. The quartet is also managing an equity follow-on transaction, expected to raise as much as $1bn, that is awaiting launch.
Rossi Renegotiates Covenants
Rossi Residencial is in the process of renegotiating covenants with Brazilian Securities for one of its domestic debt issuances, it says. The bonds were sold entirely to Brazilian Securities in order to back a sale of Certificados de Recebiveis Imobiliarios (CRI) in Brazil’s domestic market. The Brazilian developer expects negotiations to proceed “without difficulty.” It adds that similar agreements have been reached with Bradesco, Caixa Economica Federal and BTG Pactual regarding covenants on other domestic bonds. It does not elaborate on the restrictions to be adjusted, but says the renegotiations will help “allow potential improvements to accounting practices.” Rossi is also preparing a private share subscription that could raise as much as BRL500m ($245m).
Without Buyer, Cruzeiro do Sul to be Liquidated
Banco Cruzeiro do Sul is to be liquidated, Brazil’s Central Bank says, after the Fundo Garantidor de Credito (FGC) failed to find a buyer for the mid-size lender. The decision puts an end to a process that began with fraud investigations and which the FGC tried to resolve through a 51% haircut on the bank’s dollar bonds and attempt to find a buyer among Brazil’s larger banks. The FGC offer to bondholders expiring last week got 88.7% acceptance, the FGC says, though the tender was contingent on the bank finding a buyer. It had been looking to offer holders cash for $1.58bn in bonds in a process led by Bank of America Merrill Lynch and HSBC. Brazil’s central bank seized Cruzeiro in June after finding “unsubstantiated asset items,” and the bank was under the temporary administration of the FGC during an investigation. The debt default is said to be the region’s biggest since 2002. Banco Prosper, which Cruzeiro agreed to buy last year, is also to be liquidated. About 35% of Banco Crizeiro do Sul’s deposits and 60% of Banco Prosper’s are guaranteed by the FGC.
ENA Hits the Road
Panamanian toll-road operator Empresa Nacional de Autopista (ENA) is preparing fixed-income investor meetings starting next week. ENA plans to visit accounts in New York Monday and Tuesday, followed by Boston on Wednesday and the US West Coast on Thursday. In August last year ENA raised $395m through a 2025 bond yielding 5.75% and a 2019 priced to yield 5.25%. The deal was rated BBB/BBB minus. HSBC and Global Bank, managers of the previous sale, are coordinating meetings. Panama’s government, which owns ENA, had indicated later last year that a follow up to the first deal was possible and could target more than $650m.
High-yield Debt Issuers Start to Line Up
With the US Fed’s QE3 decision out of the way and some well bid high-grade bond offerings in the books this month, LatAm’s expected high-yield pipeline is beginning to take shape. Peruvian home improvement retailer Maestro and Colombia Telecomunicaciones (Coltel) plan to meet investors ahead of new transactions, hoping to take advantage of demand for corporate paper from their two countries. Colombia Telecomunicaciones is considering a benchmark-size 2022 bond denominated in USD or Colombian pesos, according to sources familiar with the plans. Fitch notes a $750m expected size when assigning a BB rating. Coltel merged its fixed operations with Telefonica Moviles Colombia in June, and is 70% owned by Telefonica (BBB) and 30% by the Colombian government. The partial government ownership makes pricing tricky, but a banker familiar with the issuer’s plans sees a starting point at the Colombian sovereign as well as the Telefonica parent’s 10-year dollar bonds, quoted at a spread of UST+400bp Thursday. The roadshow starts in Bogota and Santiago today and visits accounts in London and Lima Monday, and Boston on Tuesday before wrapping up in New York and Los Angeles Wednesday. Credit Suisse, HSBC and JPMorgan are managing. Meanwhile, Peru’s Maestro is heard planning to raise $180m through a 7-year bond, according to Fitch, which assigns a BB minus rating. A 10-year tenor is also heard being considered, as the issuer seeks to address at least $100m in debt and fund $80m in capital expenditures. Intercorp Retail Trust’s (B1/BB minus) 2018 bond, trading to yield 6.56% Thursday, is considered a direct comp. Fixed-income investor meetings commence Monday in Los Angeles, followed by visits to accounts in Boston Tuesday, New York Wednesday, Lima Thursday and Santiago on Friday. It will then visit accounts in Zurich and Geneva the following Monday before wrapping up in London September 25. Bank of America Merrill Lynch and JPMorgan are managing the transaction
Still Seeking a Buyer, Cruzeiro Extends Buyback
The credit guarantee fund administering a tender for Brazil’s Banco Cruzeiro do Sul extended its deadline by one day, it says, and is expected to make an announcement about the fate of the bank today. The Fundo Garantidor de Credito’s (FGC) offer to buy back $1.58bn of the mid-size Brazilian bank’s debt needs 90% acceptance from creditors – it was short of this mark as of the August 28 deadline – and it must find a buyer for the troubled bank. The tender had hit 75% as of the early deadline, suggesting the 90% threshold could have been reached by Thursday’s final deadline. Finding a buyer is perhaps less certain, with rumors flowing in the local press regarding which large Brazilian bank – the buyer must have at least BRL2.5bn ($1.24bn) in assets and able to inject some BRL800m into Cruzeiro – might be interested. The tender launched in August offers about 49% of face value on six seires of dollar bonds. The FGC is offering $560 cash per $1,000 principal for the bank’s 8.00% 2012 bonds. It is also offering $510 per $1,000 for its 7.00% 2013, 7.625% 2014 and 8.50% 2015 and 8.250% 2016 bonds. Holders of the 8.875% subordinated bonds receive $260 per $1,000. Those that accepted before a September 5 early deadline receive an extra $50 per $1,000. Bank of America Merrill Lynch and HSBC are managing the tender. Brazil’s central bank seized Cruzeiro in June after finding “unsubstantiated asset items.” The bank has been under the temporary administration of the FGC during the fraud investigation.
Itau Issues in UF
Itau has issued UF1m ($47m) in Chile’s domestic bond market, according to a source following the transaction. The 14-year bond priced at 99.15 with a 3.75% coupon to yield 3.83%, or the BCU20 benchmark plus 120bp. It self-managed the sale, which saw demand of over 4.5x. The bonds are rated AA/AA minus on a national scale. The deal follows a UF2m sale in August, including a UF1m 2019 with a 3.5% coupon yielding 3.6%, and a UF1m 2028 with a 3.75% yielding 3.8%.
RCO Reopens Mexico Road Securitization Market
Mexico’s Red de Carreteras de Occidente (RCO) has raised MXP8.12bn ($624m) in the Mexican bond market, pricing at the upper end of its MXP6bn-MXP8bn size objective after seeing 1.6x demand. In the first deal of its type in nearly a year, the concession operator priced a MXP2.84bn 15-year peso-denominated tranche with an 11-year average life at 9.0%, or Mbonos+340bp. A separate MXP5.28bn 20-year UDI-denominated portion with a 14-year average life came at 5.25%, or Udibonos+332bp. Investors and analysts had been expecting spreads around 270bp for each tranche prior to the transaction, though bankers claim the expectations were 330bp-350bp. Each tranche had a maximum possible MXP5bn size. The deal is rated AAA on a national scale and is backed by future toll road revenues and supported by a partial guarantee from government development bank Banobras. The bond market offers a good alternative to refinancing for RCO, which has significant syndicated loan debt, according to investors following the deal. Market conditions are also more favorable this year than last for issuing a securitization of this size and tenor, they add. BBVA Bancomer, HSBC, Inbursa and Santander managed the sale, with Goldman Sachs and HSBC as structuring agents. RCO raised MXP6.5bn in the CCD markets in 2009. The domestic market was able to place toll road securitization issuance last year, but not with size. Concesionaria de Autopistas del Sureste raised MXP3.5bn in October through 26.5-year UDI-denominated bonds priced at 6.0%. This followed a MXP1.71bn 2031 deal in April 2011 for OHL’s Gana subsidiary at 6.64%.