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.
Category: Bonds
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.
OAS Wraps Up Debentures
Brazil’s OAS has completed the sale of BRL300m ($149m) in the domestic debenture market, according to Anbima. The 2015 bonds pay the DI+2.4%, feature an 18-month grace period and are guaranteed by the Construtora OAS unit. Proceeds are destined to improve the builder and engineer’s debt profile. Bradesco managed the sale, done under the rule 476 restricted format and rated BBB on a national scale.
Penoles to Raise Domestic USD Bond
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.
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.
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
Lender Registers COP Bonds
Bancamia has registered a domestic bond issue of up to COP400bn ($220m), it says. The Colombian microlender can choose from 5 series, which are expected to have maturities between 1 and 5 years, and pay interest at fixed rates or rates set to the country’s various benchmarks. Bancoldex is partially guaranteeing the bonds. The issue will be led by Corficolombiana.