Mexichem has wrapped up negations with creditors of recently acquired Wavin, it says, renegotiating terms on EUR320m ($390m) in debt. Agreeing to pay down some of the Dutch pipe makers debt, the amount has been lowered from EUR440m, according to an official at the Mexican petrochemicals producer, generating annual savings of EUR3.2m. Several restrictive covenants have also been eliminated. The official declines to comment on the interest on the debt package due 2015, noting only that 15bp-20bp have been shaved off as a result of the negotiations. Mexichem in May surpassed 95% ownership of Wavin shares, spending nearly EUR400m, and has delisted them.
Category: Bonds
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Petrotemex Launches Tender
Petrotemex has launched a liability management operation targeting any and all of its outstanding 9.50% 2014 bonds, it says. The Mexican petrochemical company is offering holders $1,100 cash per $1,000 principal amount tendered. Holders tendering by a July 27 early tender date receive an extra $30. In the offer expiring August 10, the company is also soliciting consents to amend the indenture relating to the existing notes, eliminating all of the company’s restrictive covenants. JPMorgan is managing the process.
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Bancomer Lands Tier 2 Debt
BBVA Bancomer has raised $1bn in 2022 subordinated Tier 2 bonds, drumming up around $3.6bn in orders. Investors appeared to see value in the issuance from the Mexican bank, considered high-quality despite troubles at its Spanish parent. The A3/BBB bond priced at 99.97 with a 6.75% coupon to yield 6.75%. The bonds traded up 1.00 point in the grey Thursday afternoon, according investors. Bankers away from the deal estimate Bancomer priced 50bp-70bp wide to the yield seen on its outstanding subordinated 2021 bonds. Lead managers, however, calculate a 40bp-45bp difference once curve extension and structural differences – most notably a feature for deferrable interest and principal upon a capital ratio or Mexican regulatory event – in the new notes are taken into account. “I think the bonds are trading cheap over the medium to long-term at 70bp-100bp wide of peers from Brazil. This is mostly likely due to parent problems,” says one investor following the deal. “Despite the BBVA portion of the name, this bank is a strong credit and the only possible wrinkle we envisage is the structure, with interest and principal potentially deferrable in the case of capital ratio or Mexican regulatory events,” says Richard Segal, EM credit analyst at Jeffries. Segal notes, however, that there is a general level of confidence in the quality and transparency of Mexican banking regulation, such that the structure shouldn’t be a major risk. At least 236 accounts participated, with asset managers driving bulk of demand, followed by insurance companies, banks and some hedge fund participation. The notes rank junior to all senior debt, and pari passu with subordinated debt and to holders of common stock, according to Moody’s. Proceeds will be used to strengthen the bank’s capital structure and for general corporate purposes. BBVA, Bank of America Merrill Lynch and Goldman Sachs managed the deal, the bank’s first in the international market since March 2011.
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Braskem Returns with Surprise Retap
Braskem returned for its fourth DCM transaction this year, reopening its 2041 bonds to add $250m. The 7.125% coupon notes reopened at 101.75 to yield 6.983%, in line with 101.50 (+/- 0.50) guidance. The bonds were trading at 101.75 late Thursday, according to a trader. Leads were heard pricing the deal inside the 2041’s secondary levels, quoted at 101.50 before announcement. Demand for the reopening hit $1.8bn. In the current challenging market conditions, retaps are the best course of action for borrowers that already have well established curves as they tend to be cheaper than new benchmarks and satisfy investors’ need for extra liquidity, bankers say. BAML, HSBC and Morgan Stanley led the sale, which brings the outstanding size to $750m.
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TGN Opens Tender
Argentina’s Transportadora de Gas del Norte (TGN) has launched an exchange offer for any and all of its $141m outstanding in 9.52% 2012 bonds and $204m outstanding in 9.45% 2012 bonds, in exchange for new notes and cash, it says. In the offer, accepting holders would receive, for each $1,000 principal, $494.20 in new step-up notes, $164.68 in new claim protection notes, and $280 in cash. Holders accepting before an August 8 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. TGN does not elaborate on the new securities being offered, and and an official did not respond to a request for comment. TGN defaulted on its debt in 2008.
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Bancomer Aims Below 7%
BBVA Bancomer is heard targeting a yield in the mid to high 6%-area for a benchmark-size 10-year subordinated Tier 2 bond, pricing as soon as today. The A1/A minus rated Mexican bank was scheduled to wrap up a 7-day roadshow in Los Angeles and Chicago on Wednesday after visiting Asia, Europe, Latin America and the US. Proceeds will be used to strengthen the bank’s capital structure and for general corporate purposes. Bancomer’s subordinated 2021 bonds, trading at 6.10% Wednesday, offer a direct comp, as do other recent Tier 2 issuances from Colombian and Brazilian banks. BBVA, Bank of America Merrill Lynch and Goldman Sachs are managing the transaction, rated A3/BBB.
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Chavez Looks to Raise Debt Ceiling
Venezuela’s government hassent congress a bill to raise the country’s debt ceiling of 37%, or VEB30bn ($6.9bn), according to local news reports citing remarks from government officials. “It has become customary for the government to raise the debt ceiling at this time of the year. Although in our view, most if not all of the additional debt will be issued locally, the possibility of USD denominated debt issuance cannot be ruled out,” Citi says in a report.
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CPFL Plans Debentures
Brazil’s CPFL is preparing to raise BRL600m ($294m) in the domestic bond market, it says. The power company plans a 2019 debenture paying the DI+0.80%. It does not indicate the managers of the transaction, to be done under the rule 476 restricted format, or the use of proceeds. An official at the company declines to give additional details. Last month, its CPFL Renovaveis unit completed the sale of BRL430m in 2022 debentures paying the DI+1.7%, managed by Itau.
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Fibria Wraps Up Tender
Fibria Celulose is set to repurchase $514m of its outstanding 7.50% 2020 bonds following the close of a tender offer, it says. The Brazilian pulp and paper producer launched the offer targeting up to $500m in June, and subsequently upsized it. It offered holders $1,060 cash per $1,000 principal amount, a price set through a modified Dutch auction process, in which holders submitted a bid within a $1,000-$1,060 range. Holders accepting before the June 22 early deadline received an extra $50 per $1,000 tendered. The offer reduces Fibria’s annual interest expense by approximately $39m from 3Q 2012. Deutsche Bank and Citigroup managed the process, after which there will be about $1.87bn outstanding in the 2020 bonds.
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ICA Hits the Road
Empresas ICA plans to meet bond investors in Europe and the US this week and next. The Mexican builder and engineer will see accounts beginning in London on Friday, followed by visits to New York Monday, Boston Tuesday and the US West Coast on Wednesday. Bank of America Merrill Lynch, Deutsche Bank and Goldman Sachs are managing the process. B1/BB minus rated ICA last visited the bond market in February 2011, when it reopened its $400m 8.900% coupon NC5 2021 bonds for $100m at 99.000 to yield 9.054%. BAML handled the retap alone, after being joined by Morgan Stanley and Santander for the original deal priced in the same month.