BBVA Colombia has sold COP353bn ($192m) in domestic subordinated bonds, upsizing the transaction by COP53bn. A COP95bn 2018 tranche pays IPC+4.28%, a COP106bn 10-year tranche pays IPC+4.45%, and a COP152bn 15-year portion pays IPC+4.60%. BBVA led the deal, rated AAA on a national scale. Titularizadora Colombiana is set to follow Wednesday with a COP278bn RMBS offer, and Banco Occidente is expected Thursday.
Category: Bonds
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CFE Eyes MXP Issuance
Mexico’s Comision Federal de Electricidad (CFE) is indicating pricing of TIIE +20-25bp for its retap of 2014 bonds, according to market participants. The state-owned electricity provider is reopening for the second time the domestic floating rate 2014 and fixed rate 2020 bonds, with pricing expected as soon as today or Wednesday. It does not yet indicate the amount. It originally sold the 2014 notes with a MXP5bn ($380m) size and the 2020s for another MXP9bn in December before reopening in January for MXP4bn each. The 2014 is a floating rate bond paying the TIIE plus 26bp, and was reopened in January at 100.338. The 2020 pays a fixed 7.96% coupon and was retapped at 97.808. CFE is raising the funds for general corporate purposes. Banamex, BBVA Bancomer and Ixe are managing the sale, rated AAA on a national scale.
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Ford MXP Price Talk Heard
Price talk for Ford Credit de Mexico’s 18-month floating rate bonds is 180-200bp over TIIE, according to market participants. The auto finance services company plans to issue up to MXP1bn ($76m) through a bond issue tentatively scheduled for September 23. “The 180-200bp over TIIE represents a good premium for 18 month paper,” says an investor following the name. This will be Ford’s first bond transaction in the local bond markets since 2007. Actinver, HSBC, IXE, Scotia Capital are managing the transaction, rated A2 on a national scale.
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Mexico DCM Slowing Likely
Mexico’s domestic bond market could see issuance put on hold given continued market volatility, bankers say, with many waiting to see if a CFE transaction gets done today or tomorrow. “There is no clear sign but there is a possibility issuance may be delayed for another 2-3 weeks,” notes a Mexico-based banker. Last week, Pemex postponed issuance of up to MXP15bn ($1.14bn) in bonds because of poor market conditions. “Issuers may have the same mindset as Pemex,” notes a second banker. Mexican builder ICA and Mexican utility Comision Federal de Electricidad (CFE) both have plans to issue domestically this week, with CFE looking at a reopening its 2014 and 2020 bonds and Mexican builder ICA through two subsidiaries looking to issue up to MXP8.3bn ($632m) in asset backed bonds. “ICA and CFE are expected to issue to week but it has yet to be seen if it will happen,” notes a third banker. Mexico’s Banco Compartamos and Ford Credit de Mexico also have scheduled issuance for this week for up to MXP2bn and MXP1bn issuance respectively. Both issuances are floating rate bonds paying a spread over TIIE. “Everyone is waiting to see what will happen with CFE before deciding what to do next,” adds another banker. Bankers on the CFE deal expect pricing on Tuesday or Wednesday of this week. Mexican investors are keeping close tabs on US and European markets and are being selective. “There is tremendous risk aversion at the moment and we still remember Pemex and CFE bonds reaching 100bp over TIIE in 2008,” adds an investor.
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Minerva Eyes Mid-Term Horizon for Bond
Brazilian beef company Minerva is considering a 2-4 month window to issue in either BRL or USD as it wraps up fixed-income investor meetings this week. The buyside has cash to put to work, but it is likely to demand a high premium if a junk credit like Minerva should opt for a global BRL bond, especially in a market that remains risk averse. “The number one focus is to tell Minerva’s story, but if there is an arbitrage opportunity [the company] will consider issuing in BRL,” says a person familiar with the company’s plans. For now, however, the borrower is gauging investor sentiment before venturing forth. “We are not planning to make any moves without feeling what the market is thinking about us first,” says Minerva IR official Francisco Assis. People familiar with the matter say talk about a potential BRL300m ($176m) 5-year is premature, and that for now the company is trying to assess where a single B credit could price. Indeed, it is still a matter for debate whether a sub-investment grade name like Minerva could even print a global BRL bond at this point. “I think it will be difficult to pull off,” says one investor. “[But] the fact that [BRL/USD] is currently at 1.71, versus 1.55 a few weeks back is a positive, and represents a better entry point for any BRL-indexed investor.” The problem is that investors have already had their fill of investment-grade BRL bonds at relatively attractive yields, including Coelba’s BRL400m 11.75% 2016 and Brasil Telecom’s BRL1.1bn 9.75% 2016. To interest accounts, Minerva would have to offer higher levels than these trades and come with a decent premium to its USD-denominated 2019s, which were trading at around 10.77% area on a yield-to-worst basis as of Friday. “If they are willing to pay 15%-17% they may find demand,” but such levels could also reprice Brazil’s corporate BRL curve, says a rival banker. Still Minerva does have certain technicals working in its favor. “Investors’ cash levels appear higher today than earlier in
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BBVA Set to Lead Week of COP FIG Issuance
BBVA Colombia is scheduled to sell COP300bn ($166m) in domestic subordinated bonds today, upsizeable to COP500bn. The bank is looking at a 7-year tranche paying IPC+4.3%, a 10-year paying IPC+4.6%, and a 15-year paying IPC+4.8%. BBVA is leading the deal, rated AAA on a national scale. Titularizadora Colombiana is set to follow Wednesday with a COP278bn RMBS offer, and Banco Occidente could also pull the trigger on a deal as soon as this week. Additionally, Helm Bank has approved a COP2trn 3-year shelf to issue additional debt.
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Bladex Mandates, Awaits Window
Banco Latinoamericano de Comercio Exterior (Bladex) has mandated banks for an international bond offering and is considering tapping the markets soon if conditions are favorable, Christopher Schech, supranational bank’s CFOs tells LatinFinance. With 5 to 7-year bond funding, the supranational bank can better insulate itself against volatility and be ready to compete should markets close as they did in the wake of the Lehman debacle. Size would need to be in line with the market’s liquidity requirements, likely $150m-$200m. Schech declines to name the banks Bladex has hired. The bank has several funding sources, including deposits, and most recently it has tapped the syndicated loan markets in Asia, achieving 3-year tenors. With an EMTN program already established, the bank can issue in any currency, though it always swaps back to dollars. Apart from market volatility, the new dollar bond is complicated by the need to come in size to satisfy investors’ liquidity needs and then having to find a home for the proceeds in Bladex’s lending portfolio. “You would need to know where funding is going on a matched funding basis,” says Schech. Bladex is also considering a local market foray in Mexico, but timing very much depends on suitable windows in the swap market.
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Citi Adds to Sovereign Indexes
Citigroup has added Brazil, Chile Colombia and Peru to its set of local currency government bond indexes, and will soon launch a LatAm regional government bond index. “The growing appetite for sovereign bond market benchmarks makes these local currency government bond indexes an important addition to the family of Citigroup fixed-income indexes,” the bank says. The four Latin American indexes are part of a total of nine new indexes, increasing Citi’s benchmark coverage to 41 individual countries. On the heels of the expanding sovereign bond market coverage, Citi will also launch the Latin American Government Bond Index, a regional government bond index.
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Colombia Seeks to Facilitate Local TES Purchases
The Colombian government is seeking ways to facilitate foreign investment in its local treasury or TES market, German Arce, the country’s head of public credit, tells LatinFinance. At the moment, foreigners largely stick to Colombia’s Global TES market rather than expose themselves to the complexities and costs of investing locally. But the government is trying to change that. “How can we create conditions for foreign investors to buy local TES?” asks Arce. “We are going through the process of tax reform, in which we want to understand how we can provide a non-biased tax treatment. Today it is negatively biased for external investors.” The idea is to simplify local tax regulation and take away the uncertainties of investing in the local market. “[Regulation] is not unfriendly but complex. We are trying to simplify tax and financial regulations,” Arce adds. Tomorrow, Colombia is scheduled to offer holders of COP39trn ($21.5bn) in 5 series of domestic bonds the opportunity to exchange for 3 series of longer-dated bonds, including a new 2026.
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EM Debt Performance Hit
For the week ended September 14, EM bonds registered net inflows of $558m, according to EPFR Global. Meanwhile, Lipper data show that in the week ended September 15, EM debt funds lost 2.27%, but are still up 3.40% year-to-date. Global income funds lost 0.85% in the week, and have earned 4.23% ytd. International income funds lost 0.86% in the week, though they have earned 5.57% ytd.