The tax-exempt debentures available to Brazilian infrastructure companies should be positive for balance sheets in the sector, Moody’s says, once companies start using them. The bonds – which offer tax incentives to debenture investors if the use of proceeds are marked for infrastructure – should provide a new source of long-term financing for Brazilian infrastructure companies and be credit positive since they may be issued to refinance previously incurred shorter-term, costlier debt, the agency says. The debentures may also be used to cover previously incurred project costs ineligible for BNDES financing, such as concession liability payments. “We expect approximately BRL124 billion [$61bn] to be invested by local pension funds and private investors in [infrastructure debentures], provided that eligibility thresholds for funds are met. This pool of capital could finance about 42% of Brazilian infrastructure needs from 2012 to 2014,” Moody’s says. Global buyers could be lured, too, by the tax exemptions, though the lack of liquidity and foreign currency exposure may be risks that foreign investors are unwilling to accept without higher returns, it says. So far the only attempt at issuing in the new asset class, a BRL650m 2024 from Rodovias do Tiete, was pulled in May. Bankers remain optimistic that the deals will happen. Moody’s says uncertainties in the framework should be cleared up with the passage of additional legislation, expected “in the coming weeks.”
Category: Bonds
Peruvian Preps DCM Debut
Peru’s Maestro is heard preparing what would be its debut sale in the international bond markets, and hiring Bank of America Merrill Lynch and JPMorgan for the transaction. Additional details of the hardware and home improvement retailer’s deal are unclear, though recent first-timers of its size from Peru have generally raised up to $500m at up to 10 years. Created in 1993, Meastro operates approximately 20 stores, mostly in Lima but with an expansion plan for other parts of the country.
Petrotemex Gets 56% in Tender
Mexico’s Petrotemex has received acceptance from holders of $154m, or 56.06%, of its 9.50% 2014 bonds targeted a tender offer, it says. The Mexican petrochemical company’s acceptance rate at the August 10 deadline was only slightly higher than the 55.84% it had at the July 27 early deadline. Petrotemex offered holders $1,100 cash per $1,000 principal amount tendered. Holders who tendered by the early date received an extra $30 per $1,000.The company also obtained consents to amend the indenture relating to the existing notes, eliminating all of the company’s restrictive covenants. JPMorgan managed the process. The 2014 bonds were originally sold for $200m in 2009, and later reopened for $75m that same year, at an 8.832%yield. The bonds were trading at 111.5-112.5 in price Monday, according to a trader.
YPF Advances Borrowing Plans
Argentina’s YPF has approved plans to issue up to ARS3.5bn ($760m) in bonds, it says. Though the issuer’s $1bn shelf is good for both international and domestic issuance, the oil producer is said to be targeting the domestic market. With sizable capex needs, YPF had earlier this year been considering an international bond, but is said to prefer a local issuance given conditions in the international markets, as well as likely difficulties approaching international investors in the wake of the company’s nationalization earlier this year.
Mexico to Issue $2bn-plus in Exchange
Mexico plans to issue $2.19bn in reopened 2022, 2044 and century bonds as a result of the tender offer in which it accepted $1.88bn principal in 15 series of existing notes, its government says. The swap increased the average life of the debt by more than two years, and lowered the costs. The sovereign expects to issue approximately $559m of reopened 2022s, $963m of reopened 2044s and $670m of re-opened century bonds. It will also pay $19m of cash to accepting holders, with the premiums varying depending on which specific bonds the holder is exchanging. The sovereign accepted $522m in six series of old 2013-2017 bonds in exchange for reopened 2022 bonds, $792m in13 series of 2013-2040 bonds in exchange for reopened 2044 notes and $568m in 14 series of 2013-2040 bonds in exchanged for reopened century bonds. Bank of America Merrill Lynch, Credit Suisse and Goldman Sachs managed the process.
MMX Unit Taps Local Funds
Brazil’s MMX Sudeste Mineracao, a subsidiary of Eike Batista’s MMX mining company, has completed a BRL600m ($297m) domestic bond sale, according to Anbima. The 2014 bond pays DI plus 3.5%. Bradesco managed the sale, done under the rule 476 restricted format.
Credit Agricole Preps MXP Bond
Credit Agricole is preparing to sell floating-rate bonds in Mexico’s domestic market, according to a regulatory filing. The bonds will represent the second issuance from a MXP10bn program, and pay a spread to spread to the TIIE benchmark. Proceeds are to be used for general corporate purposes. Banorte Ixe and BBVA Bancomer are managing the sale, done through the Credit Agricole CIB Productos Financieros unit and guaranteed by Credit Agricole Corporate and Investment bank. Credit Agricole was last in the Mexican market in 2010,when it priced a 3-year floater at TIIE+30bp.
Itau Buys Out Retail Credit JV
Itau has agreed to pay BRL83m ($41m) to acquire the stake it still does not own in a retail financing joint venture with Lojas Americanas, it says. Lojas Americanas is to pay BRL112m to end a tie-up agreement with Itau that prevented it from teaming up with another bank for this type of JV.
Masisa Set for Roadshow
Chile’s Masisa expects to start a roadshow Tuesday for a domestic bond issue of up to UF2m ($94m), expected at the end of the month or in early September. The board products manufacturer can choose from a 5.00% 2017 bullet bond and a 5.30% 2033 note with a 10-year grace period. Proceeds would refinance existing debt. BCI and Scotia are leads on the deal, rated A minus on a local scale. Masisa is also heard looking next year to the international markets as an option for additional refinancing. Earlier this month, Masisa agreed to acquire the Rexcel particle board business from Mexico’s Grupo Kuo for $54m plus working capital through the close of the deal.
Metro Postpones Bond
The Dominican Republic’s Metro Country Club has decided to postpone a planned $150m 2019 bond, according to a banker managing the sale. The developer was aiming to price the securitization this week, following release of 14%-area price guidance last week. A need to update financial statements with fresh 2Q results, as numbers went stale Monday, and to give investors more time to analyze the credit were among the reasons for the wait. The transaction has a 3.5-year average life and is backed by flows related to the sale and operational revenues from the Las Olas, Marbella, Costa Blanca and Metro Country Club projects. “My guess is that they didn’t find the investor base and the price signal was wrong,” says a New York-based EM investor who opted out citing robust credit risks. Proceeds were destined to refinance $75m in existing debt, as well as complete current projects and fund the acquisition of land for new ones. Bank of America Merrill Lynch is managing the transaction, rated B2/B minus and done through the MCC Finance vehicle. Relying on private equity for funding, Metro tried a $110m debt placement in 2007 and again in 2008, and also attempted a 5-year $75m Reg D private placement in 2010.