Brazil’s Companhia Siderurgica Nacional (CSN) is planning a BRL1.57bn ($777m) bond sale in the domestic market, it says. The steelmaker is part of growing list of large and traditionally cross-border issuers who are turning to Brazil’s local market as it becomes more attractive. The steelmaker plans two tranches, each maturing in 2015. In the sale, to be done under the rule 476 restricted format, CSN is raising funds to repay previous debt. It does not indicate the bank managing the sale, and officials do not respond to a request for comment.
Category: Bonds
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Cyrela Clinches Domestic Bond
Cyrela Brazil Realty has completed the sale of BRL400m ($197m) in the domestic bond market, according to Anbima. The developer’s 2017 bond pays the DI+1.2% and amortizes in at the end of the fourth and fifth years. Caixa Economica Federal managed the sale, done under the rule 476 restricted format.
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Investors Inflate Mexichem Books
Mexichem returned to the dollar market for $1.15bn after a 3-year absence, capitalizing on the scarcity value of Mexican coporates to draw $17bn in total demand. Pricing competitively to Braskem’s dollar curve, the industrial conglomerate issued 10 and 30 year tranches that were larger than expected, by $50m and $100m, respectively. A $750m 2022 bond priced at 99.206 with a 4.875% coupon to yield 5.000%, or UST+324.2bp, at the tight end of 5.250% initial guidance that followed 5.500% talk. A $400m 2042 year tranche priced at par with a 6.75% coupon to yield UST+384.8bp, at the tight end of 7.00%-area initial guidance. The 10-year bonds were up 1.25-1.50 points in the grey, and the 30-year traded up by 2-3 points, traders say. Investors compared the Ba1/BBB minus offering to Braskem’s (Baa3/BBB) 2022 and 2041 bonds, trading to yield around 5.17% and 6.84%, respectively. “Mexichem is tight, but maybe not so much in this environment, where everything is getting done tight because there is so much money sloshing around in the market. It will be interesting down the road when there is less money in the market to allow all these deals to come so tight,” says a California-based EM investor following the deal. “Mexichem fills in a nice sweet spot in the Mexican BBB space, but at current levels Mexichem should not be trading at par with Braskem, as Braskem has better ownership and more liquidity in its curve,” notes another market participant. US investors accounted for 60%-70% of the deal, Europeans about 20%, and Asians around 10%. Proceeds will be used to refinance debt, including the funding of a tender launched Friday targeting $350m outstanding in 8.750% 2019 bonds. In the offer expiring September 13, Mexichem is offering holders $1,245 cash per $1,000 principal. Citi, HSBC, JPMorgan and Morgan Stanley handled Wednesday’s transaction, and are also managing the tender offer and an equity follow-on expected to raise as much as $1bn.
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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%.
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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%.
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Santander Chile Emerges with Bond
Santander Chile has raised $750m in the international bond market, with investors putting in for some $5bn in orders. The Aa3/A/A+ rated lender got decent demand despite tightening to UST+ 232.5bp from initial UST+262.5bp-area price thoughts. The 2022 bond priced at 98.338 with a 3.875% coupon to yield 4.079% or UST+232.5bp, inside of 237.5bp-250bp guidance. The bonds were trading up 0.125 points in the grey, according to a trader. “People want yield and were willing to go longer for a single A deal at 4%. This was a great transaction and priced inside their 3-year,” says a banker away from the transaction. Leads and bankers away from the deal were looking at BCI’s 2022 bonds as a reference point, quoted at 225bp on an interpolated basis. Deutsche Bank, Goldman Sachs, JPMorgan and Santander managed.
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YPF Returns to Market
Argentina’s YPF has raised ARP1.2bn ($258m) in 3-year domestic bonds, it says, its first issuance of debt since the government took control of the oil company earlier this year. The bonds pay the Badlar reference rate plus 4.0%, and amortize in three parts during the final year. The transaction is part of a larger sale that also included ARP300m in 1-year and 1.5-year short term debt. The sale came under a $1bn shelf, and was led by BACS, BBVA Banco Frances, Banco de Galica y Buenos Aires, Banco Macro, Santander Rio and Nacion Fideicomisos. Faced with large capex needs, YPF has indicated that it plans to sell up to ARP3.5bn in domestic bonds. YPF also plans to ask for approval to expand its debt program by $2bn, it says, and was scheduled to put the matter to a shareholder vote. The authorization would come in addition to the $1bn for which it is already authorized. The issuer is also preparing to engage international investors, with an eye on a possible issuance next year.
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Mexichem Aims Bond Sights
Mexichem was heard targeting 5.50%-area yield late Tuesday for a new 2022 bond, expected to price as soon as today, in a sale also expected to include a new 2042. The shorter bond is expected at a $700m size and the 30-year at $300m, according to ratings reports assigning Ba1/BBB minus ratings. Investors are taking a look at Braskem’s 2022s and 2041s, trading Tuesday to yield around 5.17% and 6.84%, respectively, as comps. The Mexican chemical producer was scheduled to finish fixed-income investor meetings Tuesday. Proceeds will be used to reduce debt, including the funding of a tender offer launched Friday targeting its $350m outstanding in 8.750% 2019 bonds. In the tender expiring September 13, Mexichem is offering holders $1,245 cash per $1,000 principal, which includes a $30 consent payment to adopt proposed covenant amendments. Citi, HSBC, JPMorgan and Morgan Stanley are handling the tender offer, the new bond sale, and an upcoming equity follow-on expected to raise as much as $1bn. LatAm DCM volume has been slower this week than last, with some issuers until after the US FOMC meetings scheduled to begin today. In addition to Mexichem, Santander Chile is heard considering a benchmark 10-year bond to price as soon as today, with Peru’s Maestro looking at coming to market as soon as Thursday.
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RCO Set for Domestic Toll Road Securitization
Mexico’s Red de Carreteras de Occidente (RCO) is expected to price a toll road securitization today, in a deal raising as much as MXP10bn ($770m). The concession operator could be looking at a spread of around Mbonos+270bp for a 15-year peso-denominated tranche with an 11-year average life, and around Udibonos+270bp for a 20-year UDI-denominated portion with a 14-year average life, according to buyside sources following the process. “The deal looks interesting and the spread where they are looking to price is reasonable,” says a Mexico City-based fund manager following the trade. The deal is backed by future toll road revenues and supported by a partial guarantee from government development bank Banobras. It would be the first such sale in Mexico since October of last year, the first for RCO – winner of the 2007 road concession originally known as Farac – and would represent a sizeable transaction for a Mexican local securitization market seeking greater supply. “We are looking at the deal with a lot of interest, but we’re analyzing if we want to add more infrastructure debt in our portfolio or look to equity stakes,” adds another fund manager, highlighting the option of equity deals in a building Mexican pipeline including a follow-on from infrastructure firm Pinfra. The bond market offers a good alternative to refinancing for RCO, which has significant syndicated loan debt, according to investors following the deal. They note market conditions are more favorable this year than last for issuing a securitization of this size and tenor, with more liquidity and appetite now. The asset – offering the fastest road connection between Mexico City and Guadalajara – is not only a mature one with years in operation, but also boasts growth potential. The deal is rated AAA on a national scale. BBVA Bancomer, HSBC, Inbursa and Santander are managing the sale, with Goldman Sachs and HSBC as structuring agents. RCO raised MXP6.5bn in the CCD markets in 2009. The domestic market w
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Taesa Shrinks Local Bond Plans
Brazil’s Taesa plans to sell BRL1.6bn ($792m) in domestic bonds, according to a prospectus, reducing the target from a previously indicated BRL2.5bn. The transmission company owned by Cemig plans to hold a roadshow September 20-25, and aims to conclude bookbuilding by October 10. The debenture sale includes a 2017 tranche paying DI plus up to 1.0%, an inflation-linked 2020 tranche paying a fixed rate set to the government NTN-B bond plus up to 1.55% and an inflation-linked 2024 tranche paying a fixed rate set to the NTN-B plus up to 1.65%. The exact sizes and interest rates will be determined during bookbuilding, and overallotment options could bring the total size to as much as BRL2.16bn. Proceeds will help refinance short-term debt totaling BRL2.08bn taken out in 2011 and 2012. Taesa is also considering the issue of BRL1.2bn in one-year debt alongside the debenture sale. Itau is managing the sale, which has not yet been assigned a rating. Taesa is rated AAA/Aa1 on a national scale.