Pemex has postponed the sale of up to MXP15bn ($1.22bn) in domestic bonds planned for this week, say bankers managing the deal, because of poor market conditions. The multi-tranche deal has been put off until further notice. The state-owned oil producer was set to choose among 7-year floating-rate, 10-year fixed-rate and 15-year UDI-denominated bonds. Proceeds from the issue, rated AAA on a national scale, were to be used for investment purposes and to address existing debt. Banamex, BBVA Bancomer and HSBC are managing the deal. The Mexican state-owned oil company last came to the local market when it issued MXP10bn in 5-year bonds earlier this year.
Category: Bonds
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Banco de Bogota Aims for $1bn Bond
Banco de Bogota, Colombia’s second largest lender, is looking to raise $1bn in the international bond market, according to an official at the bank. A tenor has not been chosen, though the bank is heard to be looking at a 7-year or 10-year. It has not yet disclosed which banks it has selected to manage the transaction, though Citi, HSBC and JPMorgan are thought to be favorites, after those institutions provided Banco de Bogota with acquisition financing last year. It secured a $1.2bn 1-year bridge through those financial institutions to help it acquire BAC- Credomatic, a sizeable Central American bank that represents half of Banco de Bogota’s assets. This would be the bank’s debut USD bond issuance.
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BI Raises DPR Bond
Guatemala’s Banco Industrial has closed a $150m securitization of dollar-denominated diversified payment rights (DPR), according to a source familiar with the matter. Wells Fargo managed the private placement, rated BBB by Fitch. A $40m 7-year tranche and $60m 10-year tranche were issued at a fixed rate, while a $50m in 7-year portion pays a spread over Libor. Further details of the transaction were not disclosed. The notes are Industrial’s third issuance out of its DPR program established in 2005. The bank processed about $6.2bn in DPR flows in 2010, up from $2.96bn in 2005, according to Fitch.
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Bice Plans Local Dollar Bond
Chile’s Banco BICE is preparing to raise $120m in the domestic market through what will be the bank’s first-ever dollar-denominated bond. The 2016s will carry a 3.50% coupon, and are rated AA on a national scale. The borrower would like to issue as soon as possible, but timing remains uncertain given the volatility in the broader market, a banker on the self-led deal says. This comes after several issuers have postponed transactions in the local market. Market appetite will be put to the test on Thursday when electricity holdco Saesa as well as fuel and forestry conglomerate Copec are expected to tap. Saesa delayed its UF2m ($94m) sale earlier this month, while Copec is looking to sell up to UF1.5m in 2021s.
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Chilean OTTP Holdco Readies Domestic Bonds
Inversiones Southwater, an Ontario Teachers’ Pension Plan-controlled holdco for 4 Chilean water assets, is planning to raise up to UF5.6m ($263m) in local bonds. Southwater has filed to establish debt programs to issue bonds with tenors of up to 10 and 30 years. It is looking to fund the July increase of its controlling positions in Essbio and Esval, according to Feller Ratings, which rates the bonds A+. Banco de Chile is managing the issuance. Southwater last came to market in 2009, raising UF2.2m.
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Colombia Preps TES Exchange
Colombia plans 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. The government has scheduled September 20 as the date of the debt swap, part of a plan to decrease amortizations over the next three years. Colombia will exchange 5 series of local peso denominated treasury notes due 2012, 2013, and 2014 for bonds due 2015, 2018 and 2026. It does not yet indicate the terms of the exchange.
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Global Concerns Stall Sept DCM Pipeline
With a possible Greek default back in the spotlight this week, this month’s bond issuance appears to have little chance of matching previous Septembers’ volumes, or even reaching the $5-$7bn that bankers had expected. “There is a high degree of uncertainty in the market as it pertains to the future of the euro zone and the US economy,” says a senior EM strategist. Nearing mid-September, only 4 LatAm issuers have surfaced this month, to issue $2.86bn in the cross-border market. This compares to $15.8bn in from 23 cross-border transactions in the full month September 2010, and with $11.98bn from 15 deals in September 2009, according to LatinFinance data. “Investors have less risk tolerance [especially] over the following days,” adds a debt analyst. “We are in a partial shutdown of the bond market, though we have seen some investment grade names out there,” says a London-based portfolio manager. The investor adds while there has been little activity in the LatAm bond market the positive news is that inactivity shows that borrowers are self-reliant and not overly dependent on borrowing. Bankers foresee a choppy market ahead and expect to see little to no activity in terms of bond issuance in the week ahead. Brazil’s Odebrecht has wrapped up fixed-income investor meetings with an eye towards issuing a 30-year while Peru’s BBVA Continental is the sole corporate on the road this week with BBVA, Goldman Sachs and JPMorgan, through Thursday. “Unless there is substantial news that causes an inflection point this week, it will be interesting if anything happens,” says a New York-based DCM banker.
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BBVA Peru Hits the Road
Peru’s BBVA Continental has mandated BBVA, Goldman Sachs and JPMorgan to arrange fixed-income investor meetings in the US and Europe starting next week. The borrower will see accounts beginning August 13 with scheduled stops in New York and London Tuesday, and Chicago and Switzerland Wednesday, before wrapping up in Los Angeles and Boston Thursday. BBVA Continental last came to market in November 2010, when it priced a $300m 2020 at 99.220 with a 5.500% coupon to yield 5.603%. S&P recently upgraded Continental to BBB from BBB minus following a similar move for the sovereign last month.
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EM Bonds Gain
For the week ended September 7, EM bonds registered net inflows of $684m, with local currency funds accounting for $212m of that, according to EPFR Global. Meanwhile, Lipper data show that in the week ended September 8, EM debt funds lost 0.54%, but are still up 5.74% year-to-date. Global income funds lost 0.11% in the week, but have earned 5.15% ytd. It is a similar story for international income funds, which lost 0.75% in the week, but earned 6.42% ytd.
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Odebrecht Eyes 30-Year
Brazil’s Construtora Norberto Odebrecht was heard considering a 30-year bond as it wrapped up fixed-investor meetings last week with Credit Suisse, Deutsche Bank and Goldman Sachs. The Baa3/BBB minus issuer is keeping an eye on the market and expects to issue as soon as this week, market conditions permitting. “There is plenty of interest but everything is about yield [and timing] at this stage,” says a person familiar with the transaction. Size has yet to be determined. Brazil’s Braskem was the last corporate to issue a 30-year in July, when it priced a bond at 98.479 with a 7.125% coupon to yield 7.25% or 308.1bp over UST. “Issuing a 30-year may be difficult in the current market as investors are staying closer to more liquid 5 and 10-year bonds,” says a senior portfolio manager following the name. The investor adds with 30-year USTs near historical lows it makes sense from the issuer’s perspective to lock in longer-term financing at lower rates. Odebrecht last came to market in March 2011 when it issued a $500m bond via Bank of America Merrill Lynch and HSBC.