Fears of a credit bubble in Brazil may be overblown. Loan growth remains robust but it is slowing as central bank measures kick in.
Category: Bonds
Posted inMagazine
Restricted Success?
Brazilian local bond volumes are soaring as issuers swarm to file rule 476 offerings that make deals easier and faster for listed and non-registered issuers alike.
Posted inDaily Brief
AMX Lands Second CHF
After much speculation about a possible dollar trade, Mexican telecom giant America Movil (AMX) quietly emerged Tuesday with CHF270m ($330m) 2016 bond that came with a reoffer price of 99.775 to yield 2.039%, or mid-swaps plus 86bp. The deal marked the first non-Swiss issuer to tap this market in several months. Though the borrower came at a wider mid-swap spread than its previous foray in the Swiss market, it achieved a tighter yield and coupon. AMX last raised Swiss francs in 2010 when it issued a CHF230m 2.25% 2015 that was priced with a 2.24% yield or at mid-swaps plus 65bp. Retail, institutional and private accounts were all heard participating. The company last came to the bond market in June 2010 with a EUR/GDP bond transaction, raising EUR1.75bn and GBP650m via Deutsche Bank, HSBC, and BNP Paribas. The company is heard looking at a USD bond transaction and nearing the process of selecting banks. AMX is rated A2/A/A. Credit Suisse led the CHF transaction.
Posted inDaily Brief
Banco do Brasil Sends out RFPs
Banco do Brasil has sent out RFPs to raise funds in the international bond markets, according to market participants. It remains unclear whether the Brazilian lender will try its luck with USD or perhaps a global BRL, but it is heard considering raising up to $500m as part of a global medium term program. Banco do Brasil last issued $1.5bn in Tier 2 2022 bonds in May via BAML, Banco do Brasil, BNP, JPMorgan and Banco Votorantim. The bonds were rated Baa2 and priced with a 5.875% coupon to yield 6.044% or 287.5bp over. The bank also issued EUR 750m in 2016 bonds in January to yield 4.625%. Those bonds were rated BBB/BBB minus/Baa2 and were brought to market by Banco do Brasil, BNP Paribas, Banco Votorantim and Deutsche Bank.
Posted inDaily Brief
Uruguay Heard Awarding Mandate
Uruguay is heard awarding a mandate for an international bond transaction, bringing the sovereign one step closer to coming to market. An official announcement has yet to be made, but Citi is thought to be a potential mandate given its regular presence on Uruguayan bond transactions. The country’s move to file an up to $560m debt shelf with the SEC last month, as well an upgrade to BB+ that same week by S&P, raised speculation in July that the sovereign could try a liability management trade to retire more US dollar debt or simply take a stab at retapping its existing inflation-linked notes. This falls in line with the government’s strategy of de-dollarizing its debt, something that the ratings agencies have also cited as a positive. Currently, the sovereign has three outstanding UI bonds, its 2018s, 2027s and 2037s. Uruguay last came to market in May when it issued JPY 40,000 ($493m) in 2021 Samurai notes to yield 1.64%, but hasn’t been in the broader markets since late 2009. Uruguay’s UI bonds were trading in the 3%-4% range late Tuesday.
Posted inDaily Brief
BT to Test Appetite for Global BRL
Brasil Telecom (BT) is heard considering a global BRL bond as it prepares to meet fixed-income investors through Bank of America Merrill Lynch, Citi, Deutsche Bank, HSBC, Itau and Morgan Stanley. The company is rated Baa2/BBB and is a subsidiary of Telemar Norte Leste S.A.(Baa2/BBB-/BBB), Meetings will start on Wednesday, August 31, in Chile, which is becoming an increasingly popular destination for borrowers looking to sell global BRL paper. Roadshows will continue in London on Monday September 5, in Los Angeles and Switzerland on September 6 and in New York and Boston on September 7. The parent Telemar last tapped overseas investors in December 2010, when it pulled the trigger on a EUR750m 2017 bond that was priced at 98.828 with a 5.125% coupon to yield 5.33%. On that occasion HSBC, Santander, BB Securities and Espirito Santo Investment Bank acted as leads. The operator of the Oi brand also sold $1bn in 2020 bonds in September 2010. Those bonds were priced to yield 5.50%, through BAML, BNP, BTG and Itau. Telemar has not issued an international bond through the Brasil Telecom unit since acquiring it in 2008. As part of a share structure reorganization expected to take effect by the end of the year, Telemar has decided to make Brasil Telecom the group’s sole traded share, changing its name to Oi, SA.
Posted inDaily Brief
Colombian Banks Set to Issue
The parade of Colombian banks issuing local bonds looks set to continue into September, with Chilean-controlled Banco Falabella expecting to raise a COP150bn ($84m) next week, according to local bankers. Tranche details should be determined this week, with the lending unit of retailer Falabella able to choose between several fixed and floating rate tranches with maturities of 1-10 years. BBVA, Corredores Asociados and Correval are managing the sale, rated AAA on a national scale. Leasing Bancolombia is also expected to follow the week of September 12, with a COP300bn-COP400bn sale.
Posted inDaily Brief
Emgasud Gets Fintech Funds
US investor Fintech Energy has agreed to provide funding for a renewable energy buildout by Argentina’s Emgasud. Fintech, which bought a 42.7% stake in Emgasud from AEI earlier this year, has bought $55m in privately placed bonds due 2015, paying 13.75%. The bonds represent the first of two rounds of financing, with the parties negotiating up to $125m in additional facilities.
Posted inDaily Brief
Isagen Ponders Global COP, USD Bonds
Colombia’s Isagen plans to raise up to $500m in the international bond market in either COP or USD. “We have ambitious growth plans and are planning ahead to issue in the international bond markets,” Isagen CFO Juan Fernando Vasquez Velasquez tells LatinFinance. Velasquez says Isagen may issue bonds in Colombian pesos or USD and while a deal is not imminent, six months to a year is a time frame under consideration. The Colombian state-run power group’s bond plans were approved last week by Isagen’s board of directors in effort to spur growth and improve its debt profile. In 2010, Isagen sold COP 400bn ($215m) in domestic bonds to fund capital expenditures, but has not issued internationally, according to Dealogic data. The company has a BBB minus cross-border rating for both foreign and local currency. Isagen also got approval to list its shares in New York through an American Depository Receipt (ADR).
Posted inDaily Brief
Cresud Takes to the Road
Itau is taking Argentina’s Cresud to meet fixed-income investors next week amid expectations that the company could try to place a small $60m 3-year RegS issue if market condition are right. The borrower will be in Buenos Aires on Tuesday, and in Switzerland on Wednesday before wrapping up meetings in Santiago on Thursday. The agribusiness and real estate company has a presence in Brazil, Bolivia, and Paraguay. The company has a 57.49% stake in Argentine real-estate firm IRSA, which in July 2010 issued a new $150m 144A/RegS 2020 that was priced at 97.840 with an 11.5% coupon to yield 11.875%. Leads on that issue were Citi, Itau and Santander. In February Fitch upgraded IRSA to BB minus from B+, and more recently assigned a B rating to Cresud’s upcoming bond. Cresud derives its revenues from several areas of business including the sale of crops, milk and live beef cattle, the leasing of farms and a commodity brokerage business. According to Fitch, dividend flows from IRSA to Cresud have been stable, and amounted to $17m in November 2010. “IRSA represents approximately 85% of Cresud’s consolidated Ebitda and 77% of consolidated assets,” it says. Proceeds from the new issue will go toward extending the average life of Cresud’s debt.