Chile’s Empresas Carozzi expects to delay its domestic market bond issue, according to sources following the sale, joining a line of issuers waiting for better conditions. The food and agricultural products producer had been targeting up to UF3m ($131m) later this month. It has decided to wait for better market conditions, says the source, adding that there have been few issuances in the last several weeks, with corporate players overall – save for the largest, and most highly-rated – putting their plans on hold. Banchile-Citi is managing the sale.
Category: Bonds
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Cruzeiro Impact on Peers Seen as Temporary
Despite assets taking a hit, investors were not terribly concerned for the Brazilian mid-size banking sector following the announcement of a temporary takeover of payroll lender Cruzeiro do Sul, citing noncompliance with financial standards. Cruzeiro’s bonds dropped Monday, with the 2020’s closing at 48-54, or 22% yield, according to investors, down from levels of around 80. B2 rated Cruzeiro’s troubles may cause an uptick on borrowing costs, but it is not expected to be permanent. “There is intervention [from the central bank] on the back of potential fraudulent activity, but the intention is to continue servicing the debt with the intention to sell Cruzeiro. There will be a spillover to other bank institutions that give the same services, but it shouldn’t be a problem for banks with better balance sheets. The tone of the market is risk-off and it complicates things for issuers at the moment,” says a west coast-based EM fixed-income investor. “For the innocent it makes it more expensive to access the bond market and for the guilty it will shut them off,” adds another bond investor. “There is always worry in the sector when this happens, but I think Cruzeiro do Sul is an isolated case,” Aloisio Lemos, equity analyst at Agora Corretora, tells LatinFinance. Cruzeiro represents less than 0.5% of the sector by assets or by deposits, and analysts consider payroll lending as one of the safer banking segments. Some mid-size lenders have been trading at wide spreads, with BBB rated Banco BMG’s 2020 bond trading at 13.8% and BBB+ Banco Bancusesso’s 2020 at 17.3%. Cruzeiro has been shut of from international funds, but others, including BMG in March, have had access. Like Banco Panamericano in 2010 – which required a bailout after irregularities were found – a sale is expected. Cruzeiro said it was holding talks with Panamericano buyer BTG Pactual, though discussions were said to have broken down. Brazil’s central bank announced Monday an intervention for 180 days in Cruzeiro
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Davivienda Enlarges Bond Appetite
Colombia’s Banco Davivienda now plans to issue up to $500m in international subordinated bonds, it says. The lender had previously been considering up to $350m, likely at a 7-year maturity. The bank has indicated intentions to issue this year, though with the markets keeping many issuers away thus far, the exact timing remains unclear. Davivienda is rated BBB minus. The bank is also a regular issuer in Colombia’s domestic market. In April, it raised COP400bn ($226m) in inflation-linked domestic subordinated bonds, getting a 4.37% yield for COP181.4bn in 2022 bonds and 4.56% for COP218.6bn in 2027s. An ADR equity issuance is also on the lender’s agenda. Davivienda has been using funds to expand internationally.
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BR Properties Readies Local Debut
BR Properties plans to raise BRL400m ($199m) in its first-ever domestic bond transaction, it says. The issue will have a 2017 tranche paying the DI plus up to 1.0% and an inflation-linked 2019 tranche paying up to 6.25%. The size and exact rate will be determined during the bookbuilding process, scheduled for July 13-26. Roadshows are scheduled to start June 18. 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.
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Brazilian Bank Postpones CHF Bond
Brazil’s Banco Pine has cancelled plans to raise funds in the Swiss bond market. “In light of increased volatility and deteriorating market conditions Banco Pine has decided to refrain from pursuing its debut CHF bond transaction for now,” the lender says in a statement to investors. The mid-sized bank had been considering a minimum CHF80m ($83m) 2.5-year bond and released guidance of mid-swaps plus 493bp-area, and hoped to price Friday.“The timing for Pine was not adequate, the name is not that well-known within Swiss investors and there is a general lack of appetite for Brazilian banks, in particular for mid-size,” says a Swiss investor who had been looking at the deal. UBS was sole lead on the transaction, which had a BB rating. In April last year, it had plans to issue a $300m 5-year bond in the dollar market but later postponed amid a backdrop of tanking US equity markets and oversupply from Brazilian mid-sized banks. The volatility has not closed Switzerland off to all issuers, with supranational bank CAF selling CHF175m last week.
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CAF Continues Diverse Funding Amid Volatility
Regional development bank CAF has landed bond transactions in Switzerland and Hong Kong. The Andean development bank issued a CHF175m ($180m) 2.5-year floating-rate bond at par with a coupon of 3-month Libor+145bp. The price represents a 20bp increase from its last issuance, of CHF125m in February. CAF CFO Hugo Sarmiento tells LatinFinance that while spreads have widened due to volatility, the conservative Swiss market is open to a few select issuers, and represents geographic and investor diversification. Credit Suisse managed. A1/A+/A+ rated CAF also tapped the Hong Kong dollar market, for HKD398m ($51m). The 12-year bond priced at par with a 4.00% coupon. Goldman Sachs led that transaction. The two transactions follow a $50m-equivalent 30-year note issuance in the Taiwanese market in April.
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Daimler Preps MXP Bond
Daimler Mexico is planning to issue up to MXP 1bn ($70m) in 2 or 3-year floating rate domestic bonds, according to a banker on the deal. The car manufacturer’s notes come with a guarantee from the Germany-based parent, and could be priced as soon as mid-June. BBVA Bancomer and Banamex are managing the sale, rated AAA on a national scale. Daimler last came to market in September, when it priced a MXP1bn ($73m) 3-year bond at TIIE+50bp.
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Petrominerales Clinches Converts
Petrominerales has priced a $400m convertible bond sale, it says. The 3.25% 2017 bonds are convertible in to common shares at $18.0017 per bond, representing a 35% premium to Thursday’s closing price. The shares closed Friday at CAD31.04 ($12.54). The Toronto-listed Colombian oil producer is raising money to fund a tender offer, through which it is to buy back $250m of its 2.625% 2016 bonds, at a price of 98.5. The operation leaves $272m outstanding in the 2016s ahead of a 2013 call date. ABG Sundal Collier Norge managed both the sale and the tender.
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Triunfo Plots Local Bond
Brazilian infrastructure company Triunfo plans to raise BRL300m ($149m) in the domestic market, it says. It is looking for funds to replace existing debt, and does not give indications of pricing, tenor or timing. BTG Pactual has been hired to manage.
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Brasil Foods Pulls Trigger
Brasil Foods has followed Guatemala into the bond markets this week, as the latest window of opportunity appears to have extended from sovereigns to investment-grade corporate borrowers. The Baa3/BBB-/BBB- food products company sold $500m in new 2022 bonds amid continued volatility in broader markets, getting $1.66bn in demand. Its first issuance as a high-grade credit priced at 99.070, with a 5.875% coupon, to yield 6.000%, in line with 6%-area guidance. The bond was heard trading up about 0.75 points Thursday afternoon. Brasil Foods was thought to offer 20bp-30bp concession, depending on where the existing 2020s were spotted and adjusting for the curve extension, according to investors and bankers following the transaction. “Coming out when the UST is at an all-time low paid off for Brasil Foods,” says an investor following the name. “They saw a window and jumped in. Phenomenal pricing versus local pricing, even at 6%,” notes a banker away from the deal. There were 170 accounts said to participate, with US institutional investors accounting for two-thirds. Banco do Brasil, HSBC, Itau and Santander managed the sale. If the deal continues to perform well, bankers say the window could remain open for other high-quality issuers. A recent upgrade gave Brasil Foods 3 of 3 investment-grade ratings, and the company has altered its structure through moves last year, including a regulator-mandated asset swap with Marfrig and a dairy acquisition. Brasil Foods closed a $500m dollar and euro-denominated loan facility last month, and its last previous international bond issuance was in 2010, raising $750m at 10 years through Itau, JPMorgan and Santander.