Uruguay’s central bank has introduced a reserve requirement on new foreign purchases of short-term central bank bonds, it says, as it seeks to limit inflows of speculative capital into short-term central bank paper. Foreign investors buying short-term central bank paper will have to deposit 40 out of every 100 pesos in a special central bank reserve account. “Anecdotal evidence suggests that such capital inflows have increased significantly from 4% in March to an estimated 9% currently on the back of Uruguay’s recent upgrade to investment grade, sizable interest rate differentials, and a relatively flat yield curve,” JPMorgan says. The aim of the policy is to prevent any distortions in the money market related to growing foreign capital inflows, as well as limit any undue pressure that these may exert on exchange rate and inflation dynamics, it adds. The policy should have limited impact on government securities, which are excluded from the new measure, JPMorgan says.
Category: Bonds
AMX Returns to CHF Market
America Movil has returned to the bond market to raise CHF250m ($255m), following up recent sterling and dollar issuance with a tap of the Swiss buyside. The 2018 bond represents the Mexican telecom’s third-ever CHF issuance, and priced at 99.942 with a 1.125% coupon to yield 1.135%, or mid-swaps plus 68bp. “Our intent is to develop sound investor bases for our name in different markets. That requires regular issuance and the provision of new liquidity,” CFO Carlos Garcia Moreno tells LatinFinance. The spread compares to the mid-swaps plus low-80bp levels seen Tuesday on AMX’s existing 2017 CHF bond. “This market is clearly open. There are not going to be many transactions, but it represents a diversification play. There is demand and we are having conversations for others,” says a banker close to the deal. The 2017 was AMX’s previous Swiss issuance, coming in August 2011, with the 2.0 % CHF270m pricing at mid-swaps plus 86bp. Credit Suisse managed Wednesday’s sale. The deal continues a busy issuance period for America Movil, which has raised $2.75bn in 2022 and 2042 dollar bonds, GBP750m ($750m) in sterling bonds and EUR1bn ($1.25bn) in Euro-denominated bonds in July and August. The fundraising follows agreements to increase its stake in Netherlands-based Royal KPN from 8.7% to 28% at a cost of around $3bn, and to take a 21% stake in Telekom Austria for $1bn.
Davivienda Issues Domestic Bonds
Banco Davivienda has issued COP500bn ($275m) in Colombia’s domestic bond market, according to sources following the deal. The bank sold COP96m in 2015 bullet bonds at 6.52%, COP174bn in 2022s at IPC+4.07%, and COP230bn in 2027s at IPC+4.23%. Total demand was more than 2.5x. Davivienda plans to use proceeds for the development of its credit business. Davivienda’s own brokerage led the sale, rated AAA on a local scale. In June, the Colombian bank saw 6x demand for its first-ever dollar bond, a $500m 5.875% 2022 yielding 5.950%.
Fovissste Preps Next Issuance
Mexican government housing lender Fovissste plans to raise MXP4.8bn ($370m) through a domestic RMBS sale, and is targeting an August 29 pricing, according to a regulatory filing. The 2042 bond would be denominated in UDIs and pay a fixed rate. BBVA Bancomer, Banorte-IXE and Santander are managing the sale, rated AAA on a national scale. The government-backed lender last visited the market in June, raising MXP5.20bn in 2042 notes paying 4.30%.
Paccar Advances MXP Bond Plans
Paccar Financial’s Mexican unit is planning to sell up to MXP1bn ($76m) in 2015 floating rate bonds in Mexico’s domestic market tentatively on September 5. The truck leasing operation’s bond comes under a MXP10bn program, and is scheduled to start a roadshow next week. BBVA Bancomer and Banamex are managing the deal, rated AAA on a national scale. It would be Paccar’s first domestic bond since 2008.
Triunfo Plots Bonds
Brazilian infrastructure company Triunfo plans to raise BRL350m ($172m) in the domestic market, it says, restarting a process delayed in June. The 2017 bond is able to be upsized to as much as BRL473m, and is expected to pay a spread to the DI rate. Triunfo is looking for funds to replace existing debt. BTG Pactual is managing.
Banco Compartamos Sets Target
Mexico’s Banco Compartamos is looking to pay TIIE+70bp-area on a new 5-year bond of up to MXP2bn ($152m), according to a source familiar with the microlender’s plans. The deal scheduled for August 22 would be the fourth under a MXP6bn program. Bancomer, Banamex and HSBC are managing the sale, now rated AAA/AA on a national scale. Following an S&P upgrade to AAA on a national scale from AA, the bank is eyeing more competitive pricing. Compartamos last visited the local bond market in August 2011, when it sold MXP2bn in 2016 domestic bonds at TIIE+85bp.
Belize Inches Closer to Default
Belize is unable to make a $23.1m coupon payment on its $543.8m outstanding in 2029 “super bonds” scheduled for August 20, the government says, moving the situation closer to a default and possible decision to accelerate by its bondholders. “We simply cannot afford this coupon payment given the financing shortfalls and other challenges we face. Our hope is that we move quickly toward a sensible restructuring of the instrument,” Prime Minister Dean Barrow says in a statement. The government says restructuring scenarios proposed last week would close its financing gaps in a sustainable manner. The bonds include a 30-day grace period on all interest and principal payments, after which a credit event or default could be declared, and bondholders could accelerate the bond. “They have plenty of money in foreign exchange reserves and budget account to pay the coupon. But if they choose not to, it sends a harsh signal to the market and takes the restructuring to a more adversarial realm,” says an investor following the situation. “We are sympathetic to the challenges facing Belize. However, we do not consider the indicative scenarios released last week as the start of negotiations,” says an ad-hoc bondholder group formed in response to the situation, now said to include 30 holders representing $275m. Restructuring scenarios were released despite an absence of material information necessary to evaluate the country’s debt sustainability, the group adds. Possible debt restructuring scenarios divulged last week include haircuts and maturity extensions. A first scenario entailed no reduction of principal, a 15-year grace period, a 2% coupon and final maturity of 2062. A second saw a 45% haircut, no grace period, and a coupon of 1% through 2019, 2% through 2026 and 4% through a 2042 final maturity. A third included a 45% haircut, 5-year grace period, 3.5% coupon, and mature in 2042. The government has not made any indication as to whether it would pursue any of the three. “A cred
Davivienda Readies Domestic Issue
Banco Davivienda is set to issue COP400bn-COP600bn ($223m-$335m) in Colombia’s local bond market today. The bank can choose from among a 3-year fixed-rate bullet, and 10-year and 15-year inflation-linked tranches. It plans to use proceeds for the development of its credit business. Davivienda is self-leading the issue, which is rated AAA on a local scale. In June, the Colombian bank saw 6x demand for its first-ever dollar bond, a $500m 5.875% 2022 yielding 5.950%.
LLX Plots Debentures
LLX is preparing to sell BRL750m ($369m) in domestic bonds, it says. The transportation unit of Eike Batista’s EBX plans 15-year bonds with a 3-year grace period. It is raising funds to help with construction of the Acu superport in the state of Rio de Janeiro. Caixa Economica Federal is managing the sale.