Brasil Foods emerged Wednesday with a $250m retap of its existing 2022 bond, with order books reaching $1.8bn. The Baa3/BBB minus Brazilian food products company reopened the 5.875% coupon bonds at 102.839 to yield 5.50%, in line with 5.50%-area guidance, revised from 5.625%-area. Brasil Foods’ limited outstanding issuance and status as a strong credit attracted investors, despite little new issue premium. According to market participants, the transaction was thought to give investors a 5bp concession based on a 103.00 price, or 5.47% yield, prior to announcement. “There is a lot of cash to be put to work and there are windows for high-grade names,” says a banker following the process. Proceeds from the issuance are mainly to be used to refinance existing debt. Banco do Brasil, HSBC, Itau and Santander managed the transaction. The sale brings the total outstanding size to $750m, following a $500m sale in June. The issuer had been heard looking at a $750m size in June, but opted instead to issue $500m amid market volatility and return for a retap upon an available window. The original sale came at a 6.0% yield, and got $1.66bn in demand.
Category: Bonds
Mexican Issuers Continue to Line Up
Mexico’s Grupo Kuo and government housing agency Fovissste are expected to price bonds today in Mexico’s domestic market. Fovissste plans to raise MXP5.28bn ($381m) through a 2042 UDI-denominated RMBS, and price in line with previous issuance. It paid 4.65% on a MXP4.06bn 2041 deal in March. BBVA Bancomer and Banorte-Ixe are managing the current sale, rated AAA on a national scale. Kuo is expected to price a MXP1bn 2019 domestic bond via Banorte-Ixe, at around TIIE+200bp, according to market participants.
Paraguayan Bank Sidesteps Volatility
Banco Continental Paraguay has priced a $200m 2017 bond, representing the bank’s debut in the international bond market, and the first high-yield corporate issuance from LatAm since Peru’s Ajecorp last month. Whether the deal indicates a true reopening for LatAm high-yield has yet to be seen, but scarcity value and a $450m book allowed the senior unsecured deal to price amid continued uncertainty in the market. Starting at 9%-area guidance, Continental tightened to 8.875% before pricing the Ba3/BB minus bond at par with a 8.875% coupon. The new bond was trading up 0.375 points in the grey Wednesday afternoon, according to a trader. There is some scarcity value and juice there,” says an investor following the trade. “The deal shows that there is appetite for non-investment grade names, and that the market is still open,” says a banker following the deal. The issuer was being comped against BBVA Paraguay’s (B+/Ba3/BB minus) 2016, which recently traded in the mid-7% range. “The deal was important for the bank and for the country as Banco Continental Paraguay looks to improve its credit rating and return to the debt capital markets in the future,” says a source close to management. Proceeds will be used to fund medium and long-term loans to customers and for general corporate purposes. North American buyers took 53% of the sale, Europeans 16%, LatAm accounts 15%, and Asia and other regions 13%. The transaction was heard backed by reverse inquiry from the US, and follows a roadshow in Europe, Latin America and the US. Bank of America Merrill Lynch and Citi managed the sale. Banco Continental services the agribusiness, industrial, commercial and services sectors, and is the second-largest financial institution in Paraguay in terms of net income, total deposits and shareholder’s equity, and third-largest in terms of total assets. The International Finance Corporation (IFC) owns 15.73% of the bank.
Penoles Lands USD Domestic Bond
Mexican mining conglomerate Penoles has sold $200m in 2022 dollar-denominated bonds in Mexico’s domestic market. The notes pay 4.25%, pricing at UST+260bp. Demand reached about $250m, and came mainly from Afores and insurance companies, and also some private banking accounts, according to a source with knowledge of the transaction. Seeking to match liabilities with dollar cash flows, the miner plans to use proceeds to fund expansion and cost reduction projects as well as for general corporate purposes. Banamex, BBVA Bancomer and Santander managed the deal, rated Aa1/AAA on a national scale. The Mexican miner previously sold $530m in dollar-denominated bonds in Mexico’s domestic market in September 2010, pricing a $400m 10-year tranche at 5.15% and a $130m 2015 at Libor+178bp.
Pemex Fuels Up with Long Bond
Pemex has made a return to the bond markets to raise a $1.75bn 2044 bond, getting $6.5bn in demand and one of the lowest-ever coupons for a long-dated LatAm corporate bond. In a tricky market open to the region’s highest-rated issuers, the Baa1/BBB senior unsecured bond priced at 99.552 with a 5.50% coupon, to yield 5.53%, or UST+280bp, at the tight end of UST+285bp-area (+/- 5bp) guidance that followed UST+295bp whispers. “It is a very good sign that Pemex came to market with good reception, especially amid uncertainty in the market,” says a California-based EM investor. The state-owned oil-producer was heard offering a 5bp concession against its 2041 bonds, which were spotted by bankers and investors at 270bp pre-announcement with 5bp calculated for the curve extension. The bonds were trading up 0.50-0.75 points in the grey, according to investors. “Politically, it is a good thing for Pemex to issue ahead of the elections,” notes a participating New York-based senior portfolio manager who expects a victory by Enrique Pena Nieto, a candidate who has called for reform at Pemex. “Despite tightening, we saw some value from Pemex in the current market from a solid credit. We’re cautiously optimistic about reforms to the sector which are long overdue and badly needed. It should be a positive catalyst for the sector and Mexican economy,” adds another participating EM portfolio manager. Some 315 accounts participated, with 80% coming from the US, 15% from Europe and 5% between LatAm and Asia. The issuer received approval to upsize from 1.5bn to accommodate demanded. The Luxembourg-listed bonds are guaranteed by Pemex-Exploracion y Produccion, Pemex Refinacion and Pemex-Gas y Petroquimica Basica. Barclays, JPMorgan and Santander managed the sale. Pemex held a non-deal European roadshow in May, a month after it became the region’s first credit to issue in Australian dollars through a AUD150m ($156m) 5-year sale.
Port Operator Plots Debenture
Ecorodovias’ Ecoporto Holding unit plans to sell BRL600m ($296m) in debentures, it says. It has not determined the maturity or the target interest rate for the domestic market transaction. Officials at Ecorodovias did not respond to a request for additional comment. In May, Ecoporto spent BRL540m to purchase a 41.29% stake in the Tecondi container terminal and logistics assets at the Santos port. The acquisition was initially to be funded with BRL550m in short-term debt, at 108% of the DI, in a transaction managed by BTG Pactual and Itau.
BCP Preps DPR Sale
Banco de Credito del Peru is preparing to sell bonds backed by diversified payment rights (DPR), according to a person familiar with the transaction. The exact size has not been determined, but DPR deals in LatAm are typically under $400m. The bank plans to issue floating rate bonds due 2017 with a 3-year average life, and 2022 fixed-rate bonds with a 7-year average life. The 144A/RegS bonds have an A/A rating and are expected to be priced the week of June 25. Standard Chartered and Wells Fargo are managing the sale.
BR Properties Increases Local Debt Target
BR Properties plans to raise BRL500m ($246m) in its first-ever domestic bond transaction, it says, up from the BRL400m it initially planned. The sale, scheduled to begin roadshowing today, could reach BRL675m if available overallotments are exercised. The commercial developer has also altered its interest rate expectations. The issue will have a 2017 tranche paying the DI plus up to 1.20% and an inflation-linked 2019 tranche paying up to 6.15%. The exact sizes and rates will be determined during the bookbuilding process, scheduled for July 13-26. The proceeds are targeted to repay short-term debt. Banco Votorantim, Bradesco, BTG Pactual, Citi, Itau and Santander are managing the sale, rated AA on a national scale.
Daimler Prices MXP Bond
Daimler Mexico has issued MXP1bn ($73m) in 2014 floating rate domestic bonds. The bonds pay the TIIE+30bp, pricing inside of TIIE+35bp price thoughts. Mutual funds, private banking and Afores participated. Funds raised will be used for general corporate purposes. The car manufacturer’s notes come with a guarantee from the German-based parent. BBVA Bancomer and Banamex managed the sale, rated AAA on a national scale. Daimler last came to market in September, when it priced a MXP1bn 3-year bond at TIIE+50bp.
Holders OK Metrogas Exchange
Argentina’s Metrogas has received creditor approval for a debt restructuring plan that includes the issue of new 2018 bonds, it says. The offer was accepted by holders of $136m and EUR2.8m in 2014 bonds. In February, the gas distributor offered to issue new class A bonds in exchange for 53.2% of the current debt and class B bonds for 46.8% of the debt. The class B bonds will be activated if Metrogas fails to fulfil some terms of the agreement, otherwise these bonds will be cancelled after a period of time without repayment from the company. Banco Macro advised Metrogas, which is 70% controlled by BG’s Gas Argentino.