The IFC plans to invest in Colombia’s Carvajal Empaques, through its IPO closing this week, Carvajal says. It does not say how much the multilateral is investing, and neither party responded to a request for additional comment. The Carvajal group is spinning off the maker of containers and packaging materials in a COP212bn ($121m) transaction, by selling 40m shares at COP5,300 per share. The order period is scheduled to close Thursday, with final allocation by May 29. It plans to use the proceeds to repay debt. Corredores Asociados is managing.
Category: Bonds
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VW Bank Plots Local Bond
Mexico’s Volkswagen Bank is preparing to raise MXP1bn ($73m) in the domestic bond market, it says. The 2016 bond would pay a spread to the TIIE rate. Proceeds are marked for the bank’s operating needs. Banamex and Ixe are managing the sale, rated AAA on a national scale. The bank sold MXP 1bn in 3-year domestic bonds in December, at TIIE+50bp.
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Titularizadora Eyes Debut Cross-Border MBS
Colombian mortgage securitization specialist Titularizadora Colombiana is analyzing options to issue what would be a debut cross-border mortgage-backed security (MBS), president Alberto Gutierrez tells LatinFinance. “We suspended plans for a cross-border bond in 2007 due to the crisis, but we have restarted the process and could issue in 2013,” he says. The lender is considering the deal based on market opportunity to issue cross-border MBS deals, potential for attractive pricing, and access to international investors. “It is important to access the international market as a new source of MBS funding,” Gutierrez says. Titularizadora is considering transaction of at least $250m, but has yet to define a specific structure or tenor, and will decide between dollars and Colombian Pesos. Colombia’s liquid local market has allowed Titularizadora to maintain a consistent presence there, allowing for 4 issuances per year and a total of 37 transactions over the course of 10 years to amount to $9bn dollars total. So far this year, Titiularizadora has issued 2 of its 4 annual issuances, and plans to issue its next local bond, of $200-$250m-equivalent at10 years, in August. It also plans to securitize consumer and auto loans this year, opting for local transactions that amount to $80-$100m-equivalent, likely at 7-year tenors, as it seeks to take advantage of its MBS expertise and branch out to other areas of securitization.
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Cyrela Preps CRI
Brazilian Developer Cyrela is preparing to raise BRL300m ($149m) through the sale of Certificados de Recebiveis Imobiliarios (CRI) in the domestic market, it says. The 2015 securitization of credit receivables, done through Cyrela’s Brazil Realty Companhia Securitizadora de Creditos Imobiliarios unit, would pay 108% of the DI, and amortize in equal parts in years 4 and 5. The CRI are backed by debt certificates issued by Cyrela to Banco do Brasil and Banco Votorantim, with the proceeds funding real estate projects, guaranteed by credit rights derived from the projects’ future unit sales. Banco do Brasil and Banco Votorantim are also managing the sale of the CRI.
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EDB Unit Details Debenture
Energest, a hydroelectric generator owned by Energias do Brasil, expects to pay the DI+0.98% for a domestic bond transaction, it says. It plans a BRL120m ($59m) 5-year debenture, according to a Moody’s report assigning an Aa1 national scale rating. Energest operates 15 hydro plants in the states of Mato Grosso and Espirito Santo.
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Global Bank to Reattempt Covered Bond
Panama’s Global Bank plans to revisit pricing efforts for what would be Latin America’s first covered bond as soon as this quarter, senior vp of finance Jorge Vallarino tells LatinFinance. “We are confident we will price this transaction this year and at a level that works for us,” the official says. Market conditions and a pricing disconnect for the novel structure were disclosed as reasons for a postponement at the beginning of the month. Vallarino explains that since then new investors have knocked on Global Bank’s doors, specifically global EM accounts with exposure to and appetite for structured paper. The bank was preparing a $200m 5-year bond at a 5.00-5.25% yield, but a new deal could see a larger size, he adds. A sale could come as soon as this quarter, if market conditions allow. The transaction would be led by Deutsche Bank and HSBC. Though many international accounts might have difficulty with covered bonds and other structured deals coming out of the region, many see covered bonds as a useful instrument for the right issuers in the right juridisdictions. “There is recognition by the market that these are solid instruments, and as covered bonds have a sovereign risk element to them and with Euro credit ratings going down and Latin American credit ratings going up, the market for covered bonds in Latin America is a possibility,” says Michael Morcom, head of Latin America agency and trust sales at Citi. “The biggest challenges are bringing US investors on board, and [that the issuer] does need size for funding purposes. This time next year we should see more covered bonds and the next covered bond will have to come from Latin America,” says Magchiel Groot, senior investment office at Dutch Development Bank FMO. Backed by a cover pool of residential mortgages denominated in USD and located in Panama, Global Bank’s covered bond deal had a Baa3/BBB minus rating, above Global Bank’s Ba1/BB+ default rating. The mark reflects a first recourse to Global Bank a
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Pemex Upside Not Priced In: Scotia
The bond market is not pricing in the upside of reforms that could lead to an opening up of Mexico’s Pemex, Scotia says, though major changes are not the bank’s base case scenario. “We are skeptical of recent campaign promises and our base case is that nothing happens. Nevertheless, the market is pricing zero probability of any reforms succeeding, which we think is too pessimistic,” Scotia says. Pemex, in the right environment, could trade at a yield equivalent to that of the sovereign, in contrast to its current yield differential of about 100bp over the sovereign, the shop says. The two leading candidates in Mexico’s July presidential elections have promised some form of privatization or reform at the state-owned oil company. In particular, leading candidate Enrique Pena Nieto, while shying away from a privatization, has promised to take action in his first year of office to open the firm to private investment. “Pemex needs a variety of reforms in order to raise capital, improve efficiency, and gain access to new technology. Just selling a minority interest in shares is neither sufficient nor paramount. We think there is more than one way to accomplish each objective, leaving the future administration room for creative solutions,” Scotia says.
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Infonavit Talks Price
Mexican mortgage and social services entity Infonavit is looking to price its up to MXP1.97bn ($145m) UDI-denominated RMBS in line with levels seen on previous deals, Jorge Marquez Garcia, Infonavit’s Cedevis program manager, tells LatinFinance. Infonavit last priced a MXP3bn 28-year UDI-denominated RMBS at 4.6%. The government-backed entity plans a June 7 sale. Issued through Infonavit Total, the 28-year bond will be backed by mortgages in the Infonavit Total program targeted at middle and high-income borrowers. Banamex and BBVA Bancomer are managing the transaction.
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LatAm Challenged to Boost Securitization
Despite recent successful deals in the region, challenges remain for LatAm issuers to fully exploit the potential for securitization transactions. Growing markets in Brazil and cross-border deals such as the recent $229m transaction from Peru’s EsSalud have boosted hopes, though caution from the buyside remains an obstacle. “Latin America is beginning in the securitization market. Everything is brand new and we need time to see what happens and how things develop. Complexity makes it hard to value spreads. Why should we buy a securitization with the same spread as a corporate bond and more complicated with embedded options that is not fairly valued?” says Jorge Unda, CIO at BBVA Asset Management. Issuers agree that for the moment, simplicity is the key. “We have to be clear about objectives. One has to be very neat, simple and sound. It is not easy, and sometimes it is hard to know if things were priced properly,” says Jerzy Skornya, senior finance manager at Mexico’s Infonavit. Covered bonds are one class generating optimism, despite Global Bank pulling what would have been the region’s first such deal earlier this month. “Covered bonds are coming when the time is right. In countries like Mexico there is need to expand the investor base to international markets and covered bonds is an instrument that would make it a little easier,” says Michael Morcom, head of LatAm agency and trust sales at Citi. “With growing interest from US international investors in local currency-denominated instruments, a covered bond with a payment profile that looks like a corporate bond makes it easy to hedge, and I do think the time is right for that,” he adds. With Latin America’s growing middle class and a need to provide to provide liquidity to the growing mortgage origination business and assure growth at an appropriate rate, covered bonds provide an attractive alternative to MBS given their outperformance during crisis periods. “Can we convince investors that this is a product that
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OSX Considers FPSO Bond Return
Brazil’s OSX is evaluating funding options for its next floating production, storage and offload (FPSO) project, including another project bond, CEO Luis Eduardo Carneiro and IR official Daniela Castro tell LatinFinance. “With OSX-4 the intention is to work in a similar way to OSX-3, and in the second half of the year look at a bond like OSX-3,” Castro says. The planning is still preliminary, but it would look to raise about $600m in the US or Norwegian market, she says. The shipbuilder raised $500m in 9.25% 2015 bonds in March to fund OSX-3. The first 2 OSX FPSO platforms were financed in the loan market, but Castro says the high-yield bond market is deeper and more preferable. OSX has not begun considering options for OSX-5, she says. Norwegian shop Pareto Securities was global coordinator on the OSX-3 bond, and joint lead with DNB Market.