Brazil’s AutoBan, a toll road operator owned by Companhia de Concessoes Rodoviarias (CCR) plans to begin marketing a BRL950m ($468m) debenture sale on September 15, it says. A BRL850m 2017 tranche pays up to 109.2% of the DI, and a BRL150m 2017 inflation-linked tranche pays a fixed rate set to the yield of the government NTN-B bond at the time of pricing plus up to 0.25%. The deal is able to be upsized to as much as BRL1.28bn. The exact interest rates are to be set during the bookbuilding process, which the issuer expects to wrap up by October 10. Proceeds will go towards debt repayment and projects. The issue qualifies as an “infrastructure bond,” or a local bond offering tax advantages to investors due to its use of proceeds. If AutoBan is able to price, it could be the first, though fellow road operator Rota das Bandeiras is also preparing a similar bond. Banco do Brasil, Caixa and HSBC are managing the sale, rated AAA on a national scale.
Category: Bonds
Bancoldex Wraps up Domestic Issue
Bancoldex has raised COP700bn ($388m) in Colombia’s bond market, according to a source following the sale, getting nearly 2x demand. The development bank issued a COP100bn 2014 tranche at DTF+1.47%, a COP100bn 2015 tranche at DTF+1.59%, a COP261bn 2019 tranche at IPC+3.87% and a COP239bn 2022 tranche at IPC+4.02%. The bank self-managed the sale, rated AAA on a national scale, with a group of other brokerages.
Brazil Adds to Bond Issue
Brazil has added $100m to its 2023 bond sale through a greenshoe aimed at Asian markets, it says, bringing the total size to $1.35bn. It sold $1.25bn of the bonds Wednesday, pricing at 99.456 with a 2.625% coupon to yield 2.686%, or UST+110bp. BTG Pactual and Deutsche Bank managed the sale, rated Baa2/BBB/BBB.
Brazilian Telecom Plots Bond
Companhia de Telecomunicacoes do Brasil Central, known as Algar Telecom, is preparing to raise BRL220m ($108m) in the domestic bond market, it says. It plans two series, and an official at the company does not respond to a request for comment on additional details. Part of the Algar Group, Algar Telecom offers telephone, cellular, cable television and data service in six Brazilian states.
Chilean Bank Debut Lures Buyside
Chile’s Banco de Credito e Inversiones (BCI) raised $600m in its first-ever dollar bond sale, with investors putting in for $3bn in orders. The 2017 was one of three issuances Thursday, in what has been a busy week for cross-border sales. The A1/A rated lender got the large demand despite tightening to UST+245bp yield from whispers of mid-to-high T+200bp. “The bank offered some concession, which isn’t bad for a 5-year single A name which is considered one of the largest banks in Chile,” says a New York-based EM investor following the transaction. The bond priced at 99.426 with a 3.000% coupon to yield 3.125% or UST+245bp. The bonds were up nearly a point in the grey, according to an investor. Though difficult to comp, leads were heard looking at a Banco de Estado de Chile (Aa3/A+) as a general reference point. Banco Estado de Chile’s 3.875% of 2020 bond, sold in February, traded at around 3.0%, or UST+140bp, Thursday. “BCI is a cash substitute as we are barely getting 3.0%, but there is demand for high-grade issuers and we are comfortable with the credit despite tightening,” says a participating EM investor. The issuer likely paid above what it might in the domestic market, where it is a frequent issuer, but gains size and diversity, according to people following the trade. Citi and JPMorgan managed the sale, which followed a US and European roadshow. BCI had planned a cross-border sale in 2010 but postponed in favor of a local market deal. BCI’s most recent issuance was a MXP1bn ($79m) 2013 bond in Mexico’s domestic bond market. More than $6.75bn has been issued in the cross-border market this week, making it one of the busiest since the first quarter. “We have to catch up,” says a LatAm DCM banker, noting that the strong issuance should continue through at least the end of the month, barring abnormal news from Europe. Mexichem is heading the list of names that could appear next week.
Digicel Ups Tender
Digicel has removed the limit on the tender offer for its 2015 bonds and will buy back any and all of the $1.0bn outstanding, up from an original $245 limit. The move was expected, given that the Caribbean telecom upsized its bond sale Wednesday to $1.5bn from $700m. The new 2022 NC4 bonds raise funds for the liability management operation, which targets the senior $1bn 2015s as well as $415m of 2015 toggle notes. Digicel is offering $996.25 per $1,000 principal of the 2015 toggle notes and $995.00 per $1,000 principal of the 2015 senior notes. In each case, holders accepting before September 18 receive an additional $30 per $1,000. Citi is managing the tender offer, which expires October 2.
Mexichem to Meet Bond Investors
Mexichem is preparing to meet investors ahead of a possible debt sale, according to people following the process. The Mexican chemical producer is scheduled to meet investors Monday and Tuesday in London, New York, Los Angeles and Boston, with a 144a/RegS deal potentially following. Citi, HSBC, JPMorgan and Morgan Stanley are managing. Mexichem is rated Ba1/BBB minus. Coming off of this year’s acquisition of Dutch pipemaker Wavin, it had previously indicated plans to raise up to $1bn from the bond market and up to $1bn from the equity markets. The same quartet of banks is handling the equity follow-on, which has been filed in Mexico and awaits launch.
Santander Brasil Retaps
Banco Santander Brasil joined the flurry of DCM issuance this week, reopening its 2017 bonds for $500m and taking the issue to an outstanding $1.3bn. Santander reopened the Baa1/BBB 4.625%-coupon bonds at 101.291 to yield 4.300% or UST+362.5bp, tight to 4.375%-area guidance. The pricing level left investors with 11bp concession versus a 4.19% yield level seen on its 2017 bonds before announcement, according to sources following the sale. The book size grew to more than $1bn, in a transaction heard heavily anchored by institutional investors. Some 80% went to US-based investors, and the remainder to other regions. Proceeds will be used for general corporate purposes. Bank of America Merrill Lynch, Credit Agricole, Santander and Standard Chartered managed the 144a/RegS deal. Santander priced the original $800m transaction in February, through Bank of America Merill Lynch, BNP Paribas, Santander and Standard Chartered.
Brazil Locks in Low Coupon
Brazil has sold $1.25bn in 2023 bonds, and continuing to push its debt coupon levels to new lows. Putting in for some $4.5bn in orders, investors appeared to see limited to fair value. The new bond priced at 99.456 with a 2.625% coupon to yield 2.686%, or UST+ 110bp, tight to 115bp-area guidance. The bonds traded up 0.25-0.30 points in the grey late Wednesday, according to investors. Bankers away from the deal estimate Brazil offered roughly 10bp concession, while lead managers saw 5bp-10bp. The deal appeared to check the right boxes for the Brazilian borrower with respect to low interest rates and investor appetite for quality EM credits. “Brazil is a name everyone is comfortable with and though the deal was not particularly cheap, we are living in a new environment where investment grade EM sovereign paper is viewed as a credit positive compared with European periphery names,” says a London-based EM investor eyeing the trade. “Yields and spreads are at an all time low and Brazil has not issued a 10-year since 2010, so the deal makes sense,” says a DCM banker away from the transaction. BTG Pactual and Deutsche Bank managed the sale, rated Baa2/BBB/BBB. The coupon was Brazil’s lowest ever, according to Dealogic data. It was the issuer’s first sale since BRL3.0bn 8.5% 2024 global real-denominated offering in April, through HSBC and Goldman Sachs, that was part of a tender offer.
Digicel Goes Large in Refi Effort
Digicel has raised $1.5bn in new 2020 NC4 bonds, raising funds for a liability management operation targeting two series of outstanding 2015 bonds. In a continuing demonstration of demand for high-yield credit in the region, the final size represents an increase from the $700m that the Jamaica-based telecom had announced early Wednesday morning, and covers the outstanding size of the two series to be replaced. The bond priced at par with an 8.25% coupon to yield at the tight end of 8.25%-8.50% guidance. The bond traded up one point Wednesday afternoon, according to investors. Despite a Caa1/B minus rating on the transaction, investors cited overall demand for yield and the issuer’s name recognition and continued deleveraging story as pushing demand. “There has been almost no new high yield issuance recently, and Digicel is a known name and doing pretty well,” says an EM investor following the trade, noting that Digicel’s 2018 bonds were trading around 8.0%, or 7.5% on a yield-to-worst basis. Demand was heard to have reached at least $3bn, and buyers included a mix of EM-dedicated and high yield-dedicated investors. Fitch cites a strong operating performance, diversified revenue, free cash flow generation and expectation for stable credit metrics, which are balanced against high leverage, medium-term refinancing risk, and exposure to low rated countries. Short-term liquidity is “manageable,” it says, thanks in part to Wednesday’s refinancing. Calling the refinancing effort “favorable,” Moody’s notes that adjusted leverage should remain between 4.5x-5.0x in the next two years, and the likely future use of debt to fund consolidation of its Central American holdings weighs down its rating. Citi, Barclays, Credit Suisse, Deutsche Bank, Davy and JPMorgan managed the sale, done through the Digicel Group Limited entity. The proceeds will fund a tender offer launched Wednesday that targets any and all of Digicel’s $415m 9.125%-9.875% 2015 toggle notes and up to $245m of its