The US Ex-Im Bank and Colombian state-owned development bank Bancoldex have signed an MOU to work together to facilitate trade between the 2 countries, US Ex-Im says. The pair will look to boost business in sectors including infrastructure, environmental projects, medical equipment and transportation, by expanding use of Ex-Im Bank financing by Colombian buyers of US goods and services.
Category: Bonds
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Kuo Preps Local Debt
Mexico’s Grupo Kuo is preparing to issue up to MXP700m ($51m) in the domestic bond market June 20. The holding company is looking at a 7-year tenor paying a spread to the TIIE benchmark. Ixe is managing the program, which has an A rating by Fitch. In 2010, Kuo priced a MXP700m 2015 bond at TIIE+260bp, through Ixe. Grupo Kuo has holdings in consumer goods, as well as the chemical and automotive industries.
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Mall Plaza Joins Chile Bond Pipeline
Chile’s Mall Plaza could tap the domestic bond market in the first half of June for UF3m-UF4m ($134m-$179m), according to a source familiar with the process. The mall operator unit of Falabella would likely look at a 2-tranche deal, a shorter tranche at 5 or 6 years and a longer tranche of 20-22 years, but more specific conditions have not yet been established. Proceeds are likely to be used for refinancing and investment. Mall Plaza is rated AA on a local scale. Bookrunners are heard to be IMTrust and Santander.
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Santiago Metro Nears Issue
Empresa de Transporte de Pasajeros Metro has started its bookbuilding process for a new domestic bond, and is expected to issue Thursday, says a person familiar with the sale. The Santiago subway operator is selling up to UF1.5m ($67m) in 2033 bonds with a coupon of 3.85%. The funds are to be used to refinance debt. Santander is managing the sale, rated AA/AA+ on a national scale. Metro last issued in October 2011, placing UF5.2m in 21-year bonds at a 3.75% coupon to yield 4.00%, or government bonds plus 129bp.
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Scotia to Sell UF Bond
Scotiabank is expected to issue UF2m ($89m) in the Chilean local bond market today, it says. The bank plans a 2022 bullet with a coupon of 3.5%. Scotia is managing the sale itself, rated AAA on a national scale.
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Bonds Still on the Table for Colombian Generator
Colombia’s Isagen may still consider an international bond issue this year, if conditions permit, its CFO tells LatinFinance. Though the generator is not in need of funds, it would be interested in raising $500m, to have on hand to improve its capital structure and finance growth. “Rates are still very good in the international markets now. There is a lot of volatility, but there are also windows. We want to be prepared,” Juan Fernando Vasquez says. He notes they would expect to pay in the neighborhood of 6%, compared to 8% in Colombia’s domestic bond market. Isagen is maintaining contact with international investors, who show a tremendous appetite for Colombian corporate bonds, and with banks, though it has not officially hired any, he says. Isagen’s growth could come from Colombian government bidding processes to build new generation capacity, or from expansion opportunities in other LatAm markets. Exporting power to neighboring countries should be an interesting option once necessary agreements are reached, he notes. Isagen, rated BBB minus/BB+, now has about $850m in debt. Its current $2.7bn expansion plan is already financed.
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Ceagro Eyes Local Financing for M&A
Grupo Los Grobo’s Ceagro do Brasil unit is considering raising up to BRL300m ($150m) in Brazil’s domestic market, through the sale of debentures or Certificados de Recebiveis Imobiliarios (CRI), CFO Antonio Oliva Neto tells LatinFinance. The grain producer needs funds to buy stakes of agriculture input retailers and to address working capital needs. Ceagro most recently announced the purchase of a 60% stake in Synagro, an inputs retailer and seller of agrochemical, fertilizer and seeds. Thus far, it has used pre-export finance facilities and internal funding for organic growth and acquisitions. An international bond has also been analyzed, but is not an option in the short-term, Oliva says, as Brazilian peers have been paying high rates of 9%-10% for dollar funding. “When you look at our peers in the market and coupons they are paying, it doesn’t make much sense,” he says. It also announced a 50-50 joint venture with Brazil’s Peninsula Fertilizante to operate a fertilizer mixing plant, Ceagro’s first investment in the segment, and the approval of construction of 2 new warehouses in the states of Mato Grosso and Tocantins. In January, Mitsubishi agreed to purchase a 20% stake in Ceagro for about JPY3.5bn ($45.61m). Ceagro focuses on financing producers, production, storage and supplying the local market, operating in Brazil, Argentina, Uruguay and Paraguay. It seeks to leverage the Mitsubishi deal to become a centralized grain originator in the countryside, and also to export grain to new destinations and make further acquisitions.
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EM Corporate Risk Remains Attractive Despite Volatility
Despite European headlines, slowing Chinese growth and rising global default rates, investors searching for yield in EM debt will remain a strong driver for the asset class, analysts and investors say. Moreover, EM corporate debt should weather the medium to long-term storm. “The medium to long-term outlook for the asset class is positive and continues to attract new investors,” says Paolo Valle, portfolio manager at Federated Investors. Crossover investors and new funds are turning to EM corporates, and with a small percentage of institutional investor’s portfolios exposed to EM, there is room for growth into the asset class, he says, with overall issuer quality and low cost of funding as the main drivers. In LatAm, he prefers quasi-sovereign and high-quality names, mostly from Brazil and Mexico, as well as PDVSA. “Short term drivers of performance are Europe and China, but the trends over 5-10 years will be continued growth in the asset class,” says Anne Milne, head of global EM corporate credit research at Bank of America Merrill Lynch. She adds that issuers at the moment have diversified funding options, especially in local markets, and that many are not in desperate need of funds. Milne highlights Mexican homebuilders and protein producers like Minerva as those in LatAm with upside potential. David Masse, corporate credit analyst at Prudential, notes that EM corporates are not immune to risk-on risk-off, and recommends dealing with swings by being dynamic, with participation through different types of debt instruments. So far, the short-term troubles have had limited affect on balance sheets. There has been $9bn in EM defaults since Q3 2011, notes David Spegel, global head of EM strategy for ING, though that is only 3% of the global rate. Valle, Milne, Masse and Spegel spoke on an EMTA panel in New York Tuesday.
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Inbursa Set for Pricing
Banco Inbursa plans to issue up to MXP5bn ($363m) in Mexico’s domestic bond market today, according to a banker on the deal. The 3-year floating-rate notes pay a spread to the TIIE benchmark. Proceeds will be used to fund bank operations. Actinver, BAML, Banamex and Inbursa are managing the transaction, rated AAA on a national scale. The Mexican bank last issued in February, pricing a MXP3.5bn 2014 at TIIE+20bp, and is expected to price at a similar level today.
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Holcim Preps MXP Bond
The Mexican unit of Switzerland’s Holcim plans to issue up to MXP3bn ($217m) in the domestic bond market on June 13, conditions permitting. The guaranteed notes may be split between 5-year floating rate and 10-year fixed rate tranches. Proceeds are to be used to refinance the cement maker’s debt. Banamex, BBVA, and Santander are handling the transaction, rated AAA on a national scale. Pricing is expected to be in line with previous issuances. Holcim last issued MXP1.5bn in the domestic debt market in March, pricing a 3-year floating-rate bond at TIIE+57bp.