Corporacion Azucarera del Peru (Coazucar) has priced $325m in 2022 NC5 bonds as investors filled a book that reached around $4.5bn, demonstrating again that appetite exits for strong LatAm high-yield credits. Coazucar was able to use the scarcity of Peruvian credits in particular to generate significant interest at initial low to mid-7% whispers before ratcheting down pricing to a final 6.5% yield, reminiscent of compatriot Ajecorp’s $300m sale in May. “Coazucar has high margins, low leverage and is a leader in its space,” says a participating New York-based EM portfolio manager. The sugar and ethanol unit of Grupo Gloria priced the senior secured BB/BB+ bond at 99.091 with a 6.375% coupon to yield 6.500%, at the tight end of 6.625%-area guidance, revised from 7.000%-area. The bonds were trading up a point in the grey late Thursday, according to investors. “It looks expensive from whispers of low to mid 7s to revised guidance of 6.625% area, but demand is there for Peruvian corporates,” says a participating London-based portfolio manager. Leads used BB/BB+ beverage distributor Ajecorp’s 2022 NC5 bonds, trading to yield 6.00%, as a direct comp. About 250 accounts participated, according to a banker on the deal, including asset managers, local investors, retail investors, private banking and hedge funds. Coazucar is raising funds to refinance existing debt, to make land purchases and for capital expenditures. The company has an Ebitda margin of 36.8% and net debt to Ebidta of 1.11x. It operates five mills and eight distilleries located in Peru, Ecuador and Argentina, crushing 8.4m tons of sugarcane per year. Bank of America Merrill Lynch and Citi managed the sale. “Investors focus on individual stories and not every high-yield name that emerges, but recent high-yield issuance is encouraging and should encourage more BB issuers,” says a banker away from the deal. It remains to be seen how many more of the region’s borrowers could emerge prior to the annual August vacat
Category: Bonds
Locamerica Prepares Local Debt
Locamerica plans to sell BRL200m ($99m) in Brazil’s domestic bond market, it says. The car rental agency plans a 2018 debenture paying DI+2.25% and amortizing annually beginning in 2013. It is raising funds to improve its maturity profile and for working capital. It does not say who is leading the sale, to be done under the rule 476 restricted format, and the company does not return a request for comment. Locamerica is rated A minus on a national scale, and raised BRL314m in an IPO earlier this year.
Mexican Plots Local Bonds
Paccar Financial’s Mexican unit is planning to sell 3-year floating rate bonds in Mexico’s domestic market, according to regulatory documents. The truck leasing operation does not specify the timing or size of the sale, which comes under a MXP10bn ($745m) program. BBVA Bancomer and Banamex are managing the deal, rated AAA on a national scale.
TGN Extends Early Exchange Deadline
Argentina’s Transportadora de Gas del Norte (TGN) has extended the early tender period of its debt exchange offer, it says, to August 1 from July 25. In the offer, TGN is seeking to exchange any and all of its $141m outstanding in 9.52% 2012 bonds and $204m outstanding in 9.45% 2012 bonds for new bonds and cash. Accepting holders receive, for each $1,000 principal, $494.20 in new 2019 step-up notes, $164.68 in new claim protection notes, and $280 in cash. TGN plans to issue as much as $170m in new 2019 bullet step-up notes, paying 3.5% through the first two years, 7.0% through the second two years and 9.0% during the remainder, according to a company official. Up to $174m in claim protection notes pay no coupon and are due after one year, unless there is a credit event. Holders accepting before the early date receive an additional $49.45 in cash per $1,000. The offer expires August 17, and is contingent upon a minimum 88% acceptance. Barclays is managing. TGN defaulted on its debt in 2008.
BdB Tests Dim Sum Market
Banco do Brasil has become the first Latin American bank to tap the Dim Sum bond market, with a small CNH 166m ($26m) transaction. The Brazilian lender priced the 2-year bond at par with a 3.5%, according to Dealogic data. Barclays led the transaction. The sale follows America Movil’s CNH1bn 3-year bond, which came at 3.5% in February.
Cemex to Issue at Least $400m
Cemex plans to issue a minimum of $421m in new 9.5% 2018 bonds as a result of its exchange offer launched at the beginning of the month to extend maturities of $7bn in debt, it says. The $421m amount reflects demand for the bonds – one of three new debt options on the table for accepting holders – as of the July 19 early deadline. The final amount of the new notes to be issued will determined after the August 20 final deadline and is subject to a $500m cap, which may be increased or decreased at the Mexican cement maker’s discretion. The new 2018 notes are callable in 2016 and guaranteed by more than seven Cemex units. Cemex is offering lenders an exchange of their current exposure into one or more of four securities – the 2018s, new loans paying Libor+525bp, new USD private placement notes paying 9.66%, or new yen-denominated private placement notes paying 7.735%. The interest rates on the loans and private placement notes reduce over time based on prepayment targets. Participating creditors receive an exchange fee of 80bp, and a 50bp additional cash fee if the Cemex ADS exceeds $14.50 during the 90 days after April 1, 2015. As part of the new proposal, Cemex plans to make a $1bn paydown in 2013. If it misses the payment, the debt maturity reverts to 2014. It expects to fund the paydown with asset sales, including minority stakes in Cemex operations in select countries, selected US and European assets and other non-core assets. After the paydown, the remaining debt amortizes $500m in February 2014 and $250m each in June and December 2016. The offer is contingent on acceptance from creditors representing at least 95% of existing exposures.
CFR Eyes Local Market
Chile’s CFR has started the registration process for a domestic bond issuance of up to UF4m ($184m), it says, registering tranches of up to 10 and 30 years. It would be the Chilean pharmaceutical company’s first bond issuance. Proceeds could be used for planned M&A activity. IMTrust and Santander are leading the deal, which could happen in the next few months, according to a person familiar with the plans, depending on M&A activity and market conditions. CFR has an A+ national-scale rating.
Coazucar Orders Swell Ahead of Debut
Corporacion Azucarera del Peru (Coazucar) has received $3.4bn in orders, according to investors, for a new bond of up to $350m set to price as soon as today, following 7%-area yield guidance Wednesday. The sugar and ethanol unit of Grupo Gloria initially emerged with low to mid 7% whispers Wednesday morning for the senior secured 2022 NC5 BB/BB+ bond representing the issuer’s international debut. Coazucar finished fixed-income investor meetings in Europe, the US and LatAm on Wednesday, and is raising funds to refinance existing debt and capital expenditures. The remainder of proceeds will be used for general corporate purposes. Leads are using Peruvian bottler Ajecorp’s 2022 NC5 bonds, trading to yield 6.00% Wednesday, as a direct comp and Brazilian sugar and ethanol producer Cosan’s 7.0% of 2017 bonds, trading at 4.24%. Bank of America Merrill Lynch and Citi are managing the sale. A deal would offer a continued test of high-yield corporate appetite in the region, following a well-bid $350m sale from Mexico’s ICA last week. Coazucar operates 5 mills and 8 distilleries located in Peru, Ecuador and Argentina, crushing 8.4m tons of sugarcane per year.
CPFL Upsizes Local Bond
Brazil’s CPFL has completed the sale of BRL660m ($324m) in the domestic bond market, according to Anbima, up from the BRL600m target it had set earlier. The power company’s 2019 debenture pays the DI+0.80%, in line with expectations, and amortizes in three equal parts during the final three years. Caixa Economica Federal managed the sale, done under the rule 476 restricted format. Last month, its CPFL Renovaveis unit completed the sale of BRL430m in 2022 debentures paying DI+1.7%.
Elektro Plots Domestic Issue
The board of Brazilian utility Elektro has given preliminary approval for the issue of up to BRL650m ($319m) in domestic bonds, Elektro says. The unit of Spain’s Iberdrola does not offer additional details about the sale, and an official at the company declines to comment. A sale would be Elektro’s first since a BRL300m offering of 2016 and 2018 bonds in August of last year done through Banco do Brasil and HSBC.