Mexico’s Credito Real is targeting a July 18 pricing for a new 3-year domestic floating rate bond of up to MXP1bn ($74m). The deal had originally been expected in March. Proceeds will be used to refinance short-term debt. BBVA is managing the sale, rated A/A on a national scale.
Category: Bonds
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Modelo Deal Pushes Americans to M&A Lead
The $20.1 billion sale of 50% of Grupo Modelo agreed June 29 shook up the regional M&A league tables, placing JPMorgan and Bank of America Merrill Lynch at the top, according to Dealogic. Though BAML led at the midyear point, the numbers through Friday had JPMorgan at the top with $39.5bn volume through 23 deals, just ahead of BAML’s $38.0bn from 13. Lazard, also on the Modelo deal, stood third with $31.6bn from 13. Prior to the Modelo transaction, the largest deal in EM in 1H 2012 and sixth-largest ever in EM, Itau’s $22.1bn volume led the region. Modelo also pushed regional 1H volume to $133.5bn through Friday, ahead of the $74.5bn done in the corresponding period last year. Despite the AB InBev’s purchase of the remainder of the Mexican brewer representing more foreign entry to LatAm, European divestures should continue to drive the M&A market in the rest of the year, bankers say. “We have barely hit the surface of the available divestitures in the region,” notes a New York-based banker, noting that those foreigners who can will still opt to spend more in the region. M&A Fees in LatAm paint a different picture than the volume totals, with BTG Pactual leading the league tables with $62m through Friday, or 47% of the pool. Credit Suisse is second with $34m (30%), and Itau third with $26m (37%). EM-targeted M&A volume reached $377.2bn in 1H 2012, down 4% from 1H 2011, Dealogic says. However, EM?s share of global M&A rose to 30%, the highest share since 2H 2010.
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Citi Leads DCM at Halfway Point
Citi led the LatAm DCM tables through the end of June, according to Dealogic, followed by HSBC and Itau. The US bank booked $12.6bn in volume from 52 deals in the first half when cross-border and local market deals are considered, ahead of HSBC ($8.2bn from 42) and Itau ($6.9bn from 41). Citi also claimed the lead when cross-border deals only are considered ($7.4bn), and when local market deals only are considered ($5.1bn). “Business has become fungible across product lines in the region, and we move pretty fluidly from one type of issuance to the other. Issuers are pretty agnostic about what they do, they just want the best terms,” Chris Gilfond, co-head of LatAm DCM at Citi, tells LatinFinance. Overall volume in the market remained on a pace to top last year’s record regional total. Cross-border volume in the region reached $54.2bn in 1H 2012, up from $45.3bn in 1H 2011, and marked the highest half-year volume on record, boosted by an aggressive first quarter. Volume with local market deals included was also higher, hitting $79.9bn, compared to $72.9bn in the corresponding period of 2011. “There is a really solid pipeline of business that should get done. It may need to wait a month or two in terms of finding the right window, but I’d expect something like second quarter volume in the third quarter,” Gilfond says. He expects DCM volume this year to exceed 2011’s total, both in terms of cross-border volume and combined cross-border and local market volume. In particular, appetite for global local-currency transactions should return, with deals appearing in between bouts of volatility. Brazil, Mexico and Peru led the region in 1H 2012, accounting for 54%, 22% and 6% of total volume respectively, Dealogic says. Citi also led in terms of DCM revenue, booking $52m, or 16.7% of the fee pool. The bank was followed by HSBC and JPMorgan, with $26m (8.5%) each.
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Compartamos Preps Domestic Issue
Mexico’s Banco Compartamos is preparing to issue up to MXP1.5bn ($112m) in the domestic bond market, according to a regulatory filing. The microlender will issue 5-year bonds in its fourth issuance under a MXP6bn program. Bancomer, Banamex and HSBC are managing the sale. The bank is rated AAA/AA on a national scale. Compartamos last visited the local bond market in August 2011, when it sold MXP2bn in 2016 domestic bonds at TIIE+85bp.
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ECM Volume Down; Brazilians Lead
Overall ECM volume is again disappointing this year, with issuers raising $9.7bn through 37 deals in the first half, down 55% from the corresponding period in 2011 ($21.4 through 48 deals), according to Dealogic. It is the region’s lowest half-year volume since 1H 2009. The BRL1.5bn ($712m) Suzano follow-on last week vaulted BTG Pactual into the lead in the ECM league tables, with $1.15bn in volume from 10 deals, with the bank’s own IPO also having boosted its total back in April. The Brazilian bank is followed by Citi ($1.08bn from 6 transactions) and JPMorgan ($919m from 5). Issuers got off to a late start in 2012, with relatively little volume coming before March. “Nobody was ready in the first quarter. It was a bit frustrating. If the signs of a recovery had come a little earlier in 2011 we would have had more companies ready to tap the market in January and February,” Fabio Nazari, head of ECM at BTG, tells LatinFinance. Follow-on trades, dominant in the first half compared to IPOs, should continue to be responsible for most of the activity in a second half that is difficult to predict. “Given the fact that the market has been quite challenging, advisors are likely to be more honest with issuers about the feasibility of each deal. This brings confidence to those deals that do hit the road. Each one needs to be bulletproof,” he says. In terms of fees, BTG led with $26m in revenue, or 12.7% of the pool, followed by JPMorgan ($24m, 11.5%) and Citi ($16m, 7.7%).
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ISA Unit Clinches Brazilian Bonds
Brazil’s Companhia de Transmissao de Energia Eletrica Paulista (CTEEP) has completed the sale of BRL700m ($345m) in domestic bonds, according to Anbima. The electric transmission operator’s 2014 debenture pays 105.5% of the DI. Bradesco managed the sale, done under the rule 476 restricted format. CTEEP is a unit of Colombia’s ISA.
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QG Developer Raises Local Debt
Queiroz Galvao Desenvolvimento Imobiliario has completed the sale of BRL170m ($84m) in domestic bonds, according to Anbima. The residential developer’s 2017s pay 120.5% of the DI, and amortize in 4 equal parts starting in year 4. Bradesco managed the sale, done under the rule 476 restricted format.
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Brazilians Consider Huaso Issuance
Attractive funding costs may mean the time is right for Brazilians to issue in the Chilean domestic bond markets, according to bankers active in the market. BTG Pactual is one name in particular heard to have been at least bouncing the idea off investors recently. A spokeswoman for BTG, who last year entered Chile through the purchase of Celfin, declined to comment on this possibility. Broadly, conversation around whether now is a good time to issue “huaso” bonds – as issuance from foreigners has come to be called – has emerged, as the Chilean market is now attractive for shorter tenors. Optimists had expected a thriving market for issuers from other countries in LatAm to use the mature and experienced Chilean markets, but so far only Mexico’s America Movil and Peru’s BCP have printed. “You issue a huaso bond in UF and swap it to dollars, you can swap it cheaper than the deal you would get if you go to finance it in the international market,” says Juan Andres Fontaine, vp in capital markets at Celfin, about the possibility of huaso bonds seeing more interest in tougher times. Regulatory changes designed to lure a broader range of foreign borrowers, including lower grade credits, into the huaso arena have failed to take off so far. One main consideration, say sources, has been cost, given the overall attractiveness of borrowing in dollars.
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Inepar Plots Domestic Bond
Brazilian construction and industrial conglomerate Inepar is preparing to sell BRL150m ($75m) in domestic bonds, it says. The inflation-linked 2016s are expected to pay 8.5%. Inepar plans to use proceeds for working capital and adjusting its debt profile. It has not chosen a manager for the sale, done under the rule 476 restricted format.
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Engineer Completes Local Debt
Ecogen Brasil has completed the sale of BRL95m ($48m) in domestic bonds, according to Anbima. The engineer specializing in energy efficiency printed 2019 debentures paying the DI+3.75%. Itau managed the sale, done under the rule 476 restricted format.