The outlook on Bolivia’s banking system remains stable, Moody’s says, as sustainable economic growth, decreasing unemployment, and moderate inflation continue to support the banks’ expansion. “Economic stability has improved credit conditions in Bolivia and contributed to record low non-performing loans at the banks in 2011. Banks have also cleaned up their balance sheets of legacy loans from Bolivia’s last financial crisis,” the agency adds. Declining financial dollarization in Bolivia is also helping profitability, liquidity and asset quality at the banks. The favorable conditions are partly offset by the effects of Bolivia’s still sizeable informal economy, and by low investor confidence in the banking system, along with a potentially adverse political environment, all of which may hinder the demand for credit. Moody’s expects Bolivian banks’ asset quality to remain stable.
Category: Bonds
Cruz Blanca Files Local Debt
Chile’s Cruz Blanca Salud has registered for a domestic bond, according to regulatory documents. The clinic operator plans a UF1.55m ($69m) 2033 paying a 4.23% coupon. IMTrust is lead manager. The timing for the sale is unclear.
Davivienda Sets Bond Target
Banco Davivienda has given 6%-area guidance for a benchmark-size 2022 subordinated Tier 2 bond, expected to price as soon as today. The third-largest Colombian lender is looking to help fund the $800m acquisition of HSBC subsidiaries in El Salvador, Costa Rica and Honduras agreed in January. The Baa3/BBB minus rated bank wrapped up fixed-income investor meetings in New York, Los Angeles, and Medellin Wednesday. Leads are looking at Bancolombia’s subordinated $620m 2020 bonds, which were trading at 5.30% yield Wednesday, as a direct comp. Moody’s, when assigning its Ba1 rating, suggests a size of up to $500m. The issuance is expected to be a non-preferred, non-convertible subordinated debt with no coupon deferral option, the agency says. Credit Suisse and JPMorgan are managing the sale.
Mexican Bank Plans Investor Visits
BBVA Bancomer plans to meet bond investors in Asia, Europe, Latin America and the US starting July 3. The Spanish bank’s Mexican unit starts the 7-day trip in Lima, followed by visits to accounts in Santiago, London, Hong Kong Singapore, New York and Boston before wrapping up in Los Angeles and Chicago Wednesday July 11. The A1/A minus rated bank has mandated BBVA, Bank of America Merrill Lynch and Goldman Sachs. A deal would be BBVA Bancomer’s first since a $2bn sale, offering a 2016 senior and 2021 subordinated tranches, through BBVA, Deutsche Bank and Goldman Sachs.
Molymet Prices Mexican Bond
Chile’s Molymet has issued MXP1.7bn ($125m) in 2017 bonds in the Mexican domestic market. The bonds, which represent the fourth issuance under a MXP6bn program, priced at TIIE+80bp, in line with TIIE+80bp guidance. Further details from the transaction were not immediately available. Proceeds from the Chilean mining company’s issue are marked for general corporate purposes. Banamex led the sale, with Scotia as co-manager, rated AA+/AA on a national scale.
Pemex Issues First Ex-Im Bonds
Pemex has issued $400m in bonds backed by the US Export-Import bank, the first issuance under a $1.2bn program guaranteed by the American ECA. Upsized to $400m from an anticipated $250m size, the 2022 notes with a 5.71-year average life priced at par with a 2.0% coupon. The bond was sold to US investors, and was heard more than 2x subscribed with asset managers and insurance companies driving the bulk of demand. In addition to providing a cheap and diversified source of funding, the deal represents the first time an issuer has issued a US Ex-Im backed structured bond for purposes outside of aviation funding, according to bankers following the trade. Proceeds of the issue will be used for payments for US imports of goods and services purchased by Pemex and its subsidiary entities from US suppliers for Pemex’s strategic gas program and the payment of 100% of the related Ex-Im bank exposure fee. Credit Agricole, Goldman Sachs and JPMorgan managed the sale. Pemex anticipated 4-7 such US Ex-Im guaranteed issuances under the program in the next few months, for up to $1bn. In the event additional bond funding is not feasible, US Ex-Im could also provide direct loans. The $1.2bn package also includes a $200m credit facility to support purchases from US small businesses.
Ripley Local Bond Can Wait
Chilean retailer Ripley could wait until next year for a planned bond sale, as it is not need of the money before then, says a source familiar with the matter. It had been expected to issue bonds in the domestic market at the end of April or in May. Ripley is registered for up to UF4m ($178m) in bonds of up to a 30-year maturity. IMTrust and Banchile-Citi are managing the sale, rated A+/AA minus on a national scale. The retailer will look to grow in Peru and Colombia down the road, and has seen increased regulation and a more saturated marketplace in Chile affecting its decisions in terms of focus and expansion.
Ajecorp Expects DCM Follow-up
Peru’s Ajecorp, which issued a $300m 10-year bond in May to 10x demand, could look to do another in about 2 years, says a person familiar with the beverage company’s plans. “The longer maturity for a lower cost creates the perfect scenario for funding,” says the person, adding that given the bond’s success, the board of directors has decided it’s a preferable option for the company’s next 5 years. Bank of America Merrill Lynch led the last deal, with Interbank, Jefferies and Rabobank acting as joint lead managers. The company is also expected to build toward an IPO and will seek to improve its ratings. It issued the bond at a 6.5% yield, and used proceeds to repay debt facilities, and the next transaction is expected to have similar purposes.
Bermuda Breaks out Benchmark
Bermuda has raised $475m in new 2023 bonds, completing its second-ever visit to the international DCM. Despite a Fitch downgrade earlier Tuesday morning, the deal drew demand heard reaching $1.3bn. The Aa2/AA/AA minus rated sovereign priced at par, with a 4.138% coupon, to yield UST+250bp, in line with 250bp-area guidance, which followed previous mid to high-200bp indications. Investors were mainly comping against Bermuda’s 2020 bonds, quoted between 3.19%-3.50% yield. “The deal is just under 100bp wide to the existing 2020 bonds. Good deal, decent story, though it is not a bond that will trade a lot,” says a participating investor. Leads were pinning around 25bp concession, based on a curve-adjusted spread range of 220bp-235bp on the 2020s. Fitch lowered the sovereign to AA from AA+, and this was heard factoring into pricing, as initial whispers late Monday had considered a low to mid 200bp yield. Fitch cited a weaker macroeconomic performance relative to peers, deteriorating fiscal and government debt ratios and lack of credible fiscal consolidation strategy, the agency says. Investors were unmoved by the downgrade, though, noting that the new rating falls in line with other ratings for the sovereign and that Bermuda is still one of the highest rated credits in Latin America. About 75% of the deal was allocated to fund managers, 12% to insurance and pension funds, 10% to private banks and 3% to hedge funds and others. Geographic distribution was 67% US, 30% Europe and 3% Asia. Proceeds will be used to address short-term debt, as well as fund capex and government budgetary purposes. The island nation visited accounts in London, Los Angeles, Boston and New York through Monday. Bermuda’s previous visit to the DCM was its first, raising $500m in 2020 bonds in 2010, at a 5.603% yield.
Continental Paraguay Pulls Bond on Political Concern
Banco Continental Paraguay has decided against settlement of its $200m 2017 bond priced last week, after the impeachment of President Fernando Lugo caused a secondary market slide. The 8.875% coupon bonds, priced at par last week, were trading at 93.00-94.00 before news broke of the cancellation. “The cancellation is due to a decision by the bookrunners. We will wait until the market settles to revisit the international bond market. The deal was pulled because of political aspects and not because of the financial viability of the bank,” CFO Eduardo Cespedes tells LatinFinance. The official says the bank could revisit the bond market within a few months. S&P placed ratings of multiple Paraguayan banks on credit watch with negative implications, including Continental’s BB minus mark, following a similar rating action on the Republic of Paraguay. “The credit watch listing follows President Fernando Lugo’s recent impeachment and reflects the rising credit risks resulting from the possible political and economic ramifications of the abrupt change in government and the exit of Finance Minister Dionisio Borda,” the agency says.