Mexican mining conglomerate Penoles is preparing to sell $200m-$240m in dollar-denominated bonds in Mexico’s domestic market, according to regulatory filings. The 10-year fixed-rate notes have an expected pricing date of June 13. Seeking to match liabilities with USD cash flows, the miner plans to use proceeds to fund expansion and cost reduction projects as well as for general corporate purposes, says Moody’s, which assigns a national scale Aa1 rating. The notes will be guaranteed by the company’s principal subsidiaries, excluding Fresnillo, the agency adds. Banamex, BBVA Bancomer and Santander are managing the new deal, rated Aa1/AAA on a national scale. The Mexican miner last sold $530m in dollar-denominated bonds in Mexico’s domestic market in September 2010, pricing a $400m 10-year tranche 5.15%, and a $130m 2015 at Libor+178bp.
Category: Bonds
Telecom Places Private Bond Facility
Columbus International has sold $82m in new 2017 bonds, under a senior notes facility that allows it to borrow up to $143m more on the same terms. The 9.5% bonds were placed with a single private high-yield fund, and no bank was involved, according to a company official. The Barbados-based Caribbean telecom operator may draw down additional amounts during the next year, and the notes are callable after 2.5 years. The proceeds will be used to accelerate the completion of current capital plans, fund potential future acquisitions, enhance balance sheet liquidity and flexibility and for general corporate purposes. “The new notes facility is credit negative to Columbus since it increases its leverage while free cash flow remains negative,” says Moody’s, which rates Columbus B2. Columbus’ leverage was 3.9x adjusted debt to Ebitda as of March 31, and the agency had expected it to be “well below” 4x. Columbus placed a $450m 11.5% 2014 international bond in 2009.
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.
Carozzi Preps Domestic Issue
Empresas Carozzi plans to issue up to UF3m ($130m) in Chile’s domestic bond market , likely at the end of June, says a person familiar with the sale. The Chilean food and agricultural products producer can choose between a 7-year UF bond with a 3.7% coupon and 2-year grace period, a 7-year peso bond with a 7.10% coupon and 2-year grace period, and a 20-year UF bond with a 4.1% coupon and a 15 year grace period. Banchile-Citi is managing the sale, rated A+/A on a national scale, with proceeds going to refinance liabilities. Carozzi last issued in April 2009, selling $126m-equivalent in 7 and 21-year inflation-indexed bonds on the domestic market, through BBVA.
Mexico Clinches JBIC-Less Samurai
Mexico became the first BBB rated borrower to issue a Samurai bond without JBIC support, placing JPY80bn ($1bn) in 3-year and 5-year bonds in the Japanese market. The deal follows nearly two weeks efforts in Japan and comes nearly a year after sounding out Japanese investors in August 2011. The sovereign priced JPY50bn in 2015 bonds at par with a 1.29% coupon, to yield Yen Libor+89bp, and JPY30bn in 2017s at par with a 1.56% coupon, to yield Yen Libor+110bp. Each part landed at the tight end of price thoughts of Yen Libor+80bp-100bp for the 2015 and 100bp for the 2013. Issuance without JBIC support came at a price, with bankers away from the deal estimating at least 100bp over its dollar curve. “They must have gotten good demand from Yen investors because it came at a good spread over its dollar curve and there are definitely investors out there to put Yen to work,” notes a rival banker following the trade. Mexico initially had its eye on JPY40bn-JPY50bn in a 5-year or 10-year, but indicated it would be flexible on size and tenor depending on risk appetite among Japanese investors. It has until now sought longer maturities but with the aid of a JBIC guarantee, most recently selling JPY150bn in of 10-year bonds at a 1.51% yield, or Yen Libor+50bp, in October 2010. Falling into Mexico’s medium to long-term investment program, Japanese investors represent an increasingly important market and diversification alternative, after the USD and EUR bond markets. Juan Pablo Newman, Mexico’s general director of debt issuance, told LatinFinance earlier this month that higher costs are generally associated with entering new markets, but funding costs were expected to decrease over time. Citigroup, Mitsubishi UFJ Morgan Stanley, Nomura and SMBC Nikko managed the deal.
Minerva Plans Debentures
Brazil’s Minerva plans to turn to the local bond markets for fundraising, it says, seeking a BRL420m ($208m) 2022. The meatpacker is looking for money to fund projects for the next 10 years. Pricing is to be determined during the sale process, and it does not yet name the banks. Officials at the company did not return requests for comment. In March, Minerva reopened its 12.25% of 2022 NC5 international bond for $100m, following a $350m sale in February. BTG Pactual, Goldman Sachs, Itau and Morgan Stanley managed those issuances.
Banco Pine Talks CHF Guidance
Brazil’s Banco Pine is giving guidance of mid-swaps plus 493bp-area guidance for a minimum CHF80m ($83m) 2.5-year bond expected to come by the end of the week, according to investors. Books are expected to close on Friday, with pricing expected on the same day. UBS is sole lead on the transaction, which has a BB rating and would be a debut in Switzerland. In December 2011, the bank closed a $37.5m loan from Saudi Arabia’s Al-Rajhi Bank, claiming to be the first Islamic funding for a Brazilian bank. 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. Elsewhere in the cross-border new issuance space, Brasil Foods made no announcements on any new transactions following the completion of investor meetings Tuesday.
Bancolombia Eyes Domestic Issuance
Bancolombia’s board of directors has approved an up to COP3trn ($1.6bn) domestic bond issuance, and the Colombian bank could look to issue in the second half of this year, according to a person familiar with its plans. Further terms have yet to be determined, though funds could be used generally for loan growth and portfolio needs. Bancolombia’s investment banking arm would manage the issuance.
Brazilian Paper Maker Plots Local Debt
Santher, a Brazilian paper manufacturer, plans to sell BRL230m ($115m) in Brazil’s local debenture market, it says. The 2016 bonds are to pay the DI plus 1.6%, and amortize in 5 equal parts beginning 2014. Santher will repay existing debt with the proceeds. It does not name the banks on the deal, saying only it has been authorized to hire banks, and a spokesperson declines to comment.
Brazilians Optimistic on Infrastructure Bonds after Tiete Pull
Brazilians in the country’s domestic bond market remain optimistic about the prospects for debentures issued under legislation offering buyers tax advantages if the proceeds are used for infrastructure. Toll road operator Rodovias do Tiete has cancelled the sale process for a BRL650m ($327m) 2024 bond, citing market conditions, according to sources following the deal. The inflation-linked bonds were to pay up to 8.75% and be the first to take advantage of legislation eliminating the IOF tax for buyers of bonds whose proceeds were destined for infrastructure projects. The deal had initially been expected to price the week of May 16, and was twice delayed. “The tax benefits [of the class] are very good. There was not total clarity they would be entirely applicable in this case,” says a Sao Paulo-based fixed-income investor following the deal. The delays in pricing were partially due to the uncertainty, he says, as to whether the bonds would fully qualify for the tax benefits, as the proceeds are use used to pay off BRL480m in short-term debt in addition to funding road capex. Spokespeople for the issuer and Barclays – sole lead in its first-ever Brazilian domestic market bond deal – decline to comment. “It has yet to be proven as a real market, but we are betting that that is the future,” Joao de Biase, global head of fixed income at Itau, tells LatinFinance, speaking about the opportunities under the law, known as 12431. As with the rest of the Brazilian local bond market, he says his shop sees tremendous growth prospects ahead, based on an environment of falling interest rates. “The prospects for the asset class are quite stable. Locals will want this type of return,” says a Sao Paulo-based DCM banker away from the deal. Bankers say there are other RFPs out there for this type of transaction. One particular aim of the legislation, given the IOF tax break, is increased foreign participation. Rodovias do Tiete was heard to market the deal in the US, UK and Chile, in