Brazil’s Ceagro Agricola could consider another bond transaction in the international markets as soon as next year, CEO Antonio Carlos Goncalves tells LatinFinance. “While we don’t have an issue date yet, future bonds will be used for working capital purposes,” he says. Goncalves has expressed interest in receiving proposals from investment banks at the start of 2012. In October last year, Ceagro raised $100m by offering international investors a rare double-digit yield from a Brazilian credit in a sector still underrepresented in the bond market. The commodities broker’s B/B minus 2016 bond priced at 98.965 with a 10.750% coupon to yield 11%. Ceagro’s main business involves supplying growers with fertilizer in exchange for contracts for future delivery of products, mostly corn and soy, and then selling products on. Jeffries managed its last bond sale. Recently, Fitch raised Ceagro’s rating to B from B minus. The agency cites the agricultural services company’s strong position in the sector, improving operating margins, and below expected leverage thanks to stronger cash flow generation. It expects Ceagro’s volumes and margins will remain significantly higher than their historical levels as a result of an improved ability to source grains and negotiate prices with suppliers of transportation and fertilizers.
Category: Bonds
Cresud Crosses Finish Line
Argentina’s Cresud priced its 3-year bonds in line with 7.5% guidance Friday generating a comfortable book size that met its needs. The $60m deal was priced at par and gave investors a 7.5% coupon and yield. Participating investors consisted of private banking clients, mostly from LatAm. The agribusiness and real estate company met fixed-income investors in Buenos Aires and Santiago, Chile making only one stop in Switzerland. Settlement falls on September 7. Cresud is involved in farming and livestock production as well as dairy operations. Proceeds will be used to refinance existing debt. As of March 31, the company had $167m in standalone debt of which 50% was short-term. The bonds have a B rating from Fitch.
Debt Issuers Line Up in Uncertain Market
Some borrowers have been trying to get an early start ahead of a busy September, but the Tuesday morning after Labor Day may be a tough one if the performance of European equity markets is anything to go by. Further worries about European peripheral debt ignited a selloff in the equity markets Monday, which doesn’t bode well for the US open this morning. The spike in risk aversion is likely to hurt any junk names seeking to issue bonds, but could work in favor of high-grade credits, especially if a flight-to-safety bid keeps UST low. So far three credits have already announced fixed-income investor meetings and bankers say there is at least $5bn-$7bn in the pipeline for this month. Odebrecht, Brasil Telecom, and Banco de Credito del Peru have each started or are about to begin road shows. Brasil Telecom, a unit of Telemar, is looking to test investor appetite for a global BRL-denominated bond, while Mexico ended Japanese investor meetings last week with an eye towards issuing in Yen. Corporates including Colombian utility Empresa de Energia de Bogota, Brazilian electricity company Eletrobras, Peruvian development bank Cofide, and Argentine credit card company Tarjeta Naranja, have all mandated banks and could also be stepping forth as soon as this month. Borrowers that have postponed issuance in the previous months, like Argentina’s YPF, may also make a comeback if market conditions permit. While 10-year UST yields around 2% make issuance attractive, if risks escalate and massive selloff occurs in the broader markets, the September pipeline could be moved to December, investors say.
EPM Telecom Eyes Local Bond
UNE EPM Telecomunicaciones, the telecom unit of Colombia’s Empresas Publicas de Medellin, is aiming to raise COP300bn ($168m) in the domestic bond markets in the fourth quarter. The issuer is to choose among maturities of 1-15 years, set to the DTF, IBR and IPC rates. Correval is managing the sale, rated AAA on a national scale.
Lojas Americanas Gets BNDES Cash
Brazilian retailer Lojas Americanas has agreed to sell BRL293m ($178m) in 2017 convertible debentures to government development bank BNDES. The bonds to be purchased by the BNDESPar unit pay a fixed rate of 13.15%, and are convertible at a BRL19.25 per share price at any time. Americanas has also taken out a BRL442m credit line with BNDES. The retailer plans to use the new funds for its organic expansion plan.
MBono Syndicated Auction Set for Wednesday
Mexico has scheduled its MXP25bn ($2bn) MBono auction for Wednesday. The 2031 bonds come with a coupon of 7.20%. The government began selling some of its domestic bonds through this type of larger syndicated sale in 2010 with the aim of allowing a large offering in one fell swoop rather than having to build outstanding size incrementally through a series of auctions. The bonds also qualify for inclusion in key indices and draw in a broader group of investors.
Peru Retap on the Horizon?
Bankers are heard pitching Peru to reopen its 2050 bonds, in a move that could lock in historically low yields much like Mexico did in its August century bond retap, according to market participants. Investors say there is demand for yield and duration, making it sensible for Peru to retap the 2050s. A recent upgrade to BBB from BBB minus by S&P, may have also brought the sovereign one step closer to issuing debt in the international markets. While it is expected the sovereign will favor a local-currency trade, in July it filed to issue up to $5bn in new debt securities with the SEC. It remains to be seen what the sovereign would decide in terms of size, tenor and timing if it opts to issue in the dollar market, bankers say. “With low USTs both a retap and a new 10-year would work,” notes a DCM banker. The republic originally sold $1bn in the 2050s last year, along with $1.5bn-equivalent in retapped sol-denominated 2020s. As of Friday afternoon Peru’s 2050s were quoted at 106.75 or at 5.29% on a yield basis.
Bladex Closes Upsized Syndication
LatAm supranational bank Latinoamericano de Comercio Exterior (Bladex) has closed a $165m 3-year loan syndication, bringing a total of 9 banks into the transaction. The deal was upsized from an original $150m target after margins were set at Libor+110bp. Leads were heard offering 90bp fees for tickets of $15m or more, 75bp for tickets of between $10m-$14m and 60bp for tickets of between $5m-$9m. Mizuho and Chang Hwa Commercial Bank jointly arranged the facility, with the former acting as bookrunner and the latter as MLA. BBVA and First Commercial Bank later came in as MLAs, Bank of Taiwan and the Export Import Bank of the Republic of China as arrangers, with Land Bank of Taiwan, Mega International Commercial Bank and Hua Nan participating as senior managers. Proceeds are going toward refinancing existing facilities taken out in 2009.
Chileans Hold on Local Offerings
Poor market conditions have forced Chilean borrowers Grupo Saesa and Entel to delay local bond transaction that had been set to price on Thursday. Saesa is now aiming to issue a UF2m ($94m) bond next week if conditions allow, according to bankers on the sale. The electricity holdco had been eyeing 30-year bonds paying a coupon of 3.35% as it looks to refinance existing debt. BBVA Chile and IMTrust are managing the sale, rated AA on a national scale. Less is known about the fate of Entel, which elected not to price up to UF5m ($235m) in domestic bonds on Thursday, say market participants. No rescheduling has been announced, they add. The telecom had been looking to select among a 5-year CLP-denominated tranche paying a 6.1% coupon, a 5-year UF portion paying a 3.2% coupon and a 21-year tranche with a 3.5% coupon. Bice and IMTrust are managing the sale, rated AA minus on a national scale.
Copec Plots Domestic Bond
Chilean fuel and forestry conglomerate Empresas Copec plans to raise up to UF1.5m ($71m) through the issuance of 2021 bonds in the local market. It will chose among two series, a UF-denominated tranche with a 3.25% coupon and a CLP-denominated tranche paying 6.25%. Timing has yet to be announced, but a company official says the deal could take place as soon as next week. Santander is managing.