Brazil’s Multiplan is preparing a BRL300m ($188m) domestic bond transaction. The shopping mall developer and operator plans to issue 2016 bonds that will pay the DI plus up to 1.15%. Proceeds are earmarked for construction, acquisition or expansion of shopping centers, working capital, and for paying debt. Multiplan officials decline to name the managing bank on the deal, which is being done under the rule 476 restricted format.
Category: Bonds
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Chile Moves Closer To Foreign Foray
Chile is inching closer to tapping the international bond markets this year after sending request for proposals (RFPs) for a potential bond issue, bankers say. While details have yet to be disclosed, the sovereign has in the past expressed interest in a benchmark transaction with the idea of raising up to $1.5bn in the international capital markets in 2011. Earlier this year, Finance Minister Felipe Larrain was quoted saying that CLP or USD issues were on the table. Chile’s reluctance to return to market since its blowout dual-tranche issue last year was partly driven by fears that offshore offerings would put upward pressures on the peso. Where Chile will come along the curve or if it will try global pesos is still open to debate. Ignacio Briones, the country’s head of public credit, told LatinFinance in March that 5, 10 or 30-year bonds were all a possibility. The sovereign last came to market in 2010 when it priced a $1.5bn 2-tranche USD and global CLP-denominated 10-year bonds with Citi, HSBC and JPMorgan. The bonds were rated Aa3/A/A+. Briones said in March that the public credit’s principal goal was to achieve a tighter spread than the UST+90bp it locked in on its last 10-year. But spreads may be somewhat irrelevant this time around given how tight USTs have been trading and the sorts of yields borrowers can potentially lock in. The sovereign’s US dollar 10-year was first priced at 99.877 with a 3.875% coupon to yield 3.89%, but it is now trading at around 2.96% or 85bp over.
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Mexico to Meet Japanese Investors
Mexico is set to kick off non-deal roadshows in Japan as it eyes the possibility of tapping the Samurai market without a JBIC guarantee. Citigroup, Bank of Tokyo Mitsubishi and Nomura are taking the sovereign to meet Japanese accounts next week, but with so much uncertainty hanging over the markets it remains unclear whether the borrower will pull the trigger. The head of public credit Alejandro Diaz de Leon told LatinFinance earlier this month that the country intended to build a long-term relationship with this investor base and wants to be a frequent Samurai issuer. In October last year, it used a JBIC guarantee when it sold JPY150bn ($1.8bn) of 10-year yen-denominated bonds at a 1.51% yield, getting JPY300bn in demand. A deal without a JBIC guarantee has been a long-term goal of the government, but Japanese investors have so far been unwilling to take the leap. Whether they will this time is unclear in light of recent volatility. The country is directly exposed to any downturn in US economic growth, but in many ways it has a good story to tell. “Disciplined public finances along with low and stable inflation provide [Mexico] room to face external shocks,” Bank of America Merrill Lynch analysts say. This came as June retail sales were reported to be higher than expected, helping push the local bolsa up 1.38% on Monday Credit market s were also comparatively stable Monday, but investors are still awaiting a signals from the Fed as to what it might do next to stimulate growth and perhaps prevent the US economy from sinking back into recession. Fed Chairman Bernanke’s speech Friday is expected to provide some clues.
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Tarjeta Naranja Preps Retap
Fitch has assign a long-term foreign rating of B to an upcoming $100m retap of fixed-rate notes from Tarjeta Naranja, indicating that the Argentine credit company is preparing another international bond foray. The reopening would bring the outstanding size of the bond to $300m, the agency says. In January, the borrower raised $200m from the sale of a new 2017 bond via Bank of America Merrill Lynch and Deutsche Bank, pricing it at par to yield 9%. Tarjeta is controlled by Banco Galicia, the country’s third largest private bank by deposits. The company offers its own branded cards, as well as Visa, MasterCard and American Express, to the middle income segments of the population, and is Argentina’s second largest credit card provider.
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EM Local Currency Funds Buck Trend
EM bond funds may have lost $373m for the week ending August 17, but EM local currency bond funds received $273m, according to fund data company EPFR Global. This makes local currency funds one of the few fixed-income classes to see gains.
“EM local currency bond funds continue to demonstrate safe-haven status in this market crisis, and we are increasingly convinced that this will remain the case,” says RBS. Fixed-income funds’ performance showed a gain of 1.53% for the week ending August 18, according to Lipper, bringing ytd gains to 5.53% gain. Meanwhile, global-income funds rose 0.98% for the week, to yield 5.58% growth ytd. International income funds were up 1.16%, bringing the ytd return to 7.82%.
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Cresud Selects Bank on External Bond
Argentina’s Cresud has mandated Itau to issue up to $60m in bonds in the international debt markets. The agriculture company plans to sell the senior unsecured bullet notes due 2014 in early September, but may issue in late August if market conditions permit. The Argentine agriculture company is involved in farming and livestock production as well as dairy operations. The company plans to extend the average life of existing debt through issuance of the notes, according to Fitch. The bonds have a B rating by Fitch.
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ENA Prints on Volatile Day
Panama’s Empresa Nacional de Autopista (ENA) ventured into volatile markets Thursday to price $395m in dual-tranche bond. Demand was three times over across both tranches, with buyers comprising local banks as well as US insurance companies and pension funds. Tranche A was placed mostly with international accounts, while Tranche B went to domestic investors. “At well over +125bp spread to the sovereign curve, these bonds, especially the 2019 tranche, were very attractively priced,” says one investor. Still spreads came tighter than the original 200bp-250bp that leads were discussing when the deal first emerged. “If you look at other infrastructure deals like the [Brazilian] drillship bond s, they came 100bp wide to Petrobras which is 100bp wide to the sovereign, so to come inside that is a testament to the structure,” says a banker. Both tranches priced at par to yield 5.75% for tranche A’s $170m 2025s and 5.25% for tranche B’s $225m 2019 bonds. ENA is the only LatAm issuer to price this week following a nice flow of US high-grade names. The 144A/RegS notes will be listed on the Panama Stock Exchange, with collateral taking the form of collections from the Corredor Sur toll road and shares of ENA. Tranche A has a make-whole at Treasuries +50bp. Proceed are to be used to refinance $150m of 6.95% amortizing 2025s that helped finance the Corredor Sur tollroad covering 19.5km of Panamanian highway. HSBC and Global Bank led the transaction. The bonds are rated BBB minus/BBB.
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GBM Extends MXP Pricing
Grupo Bursatil Mexicano (GBM), the Mexico-based brokerage firm, has extended pricing until August 25 for an up to MXP1bn ($81.5m) 3-year local bond. GBM plans to issue floating rate bonds at preliminary, non-official guidance of TIIE + 75bp, and may adjust pricing, tenor and size before next week. Proceeds will be used to rollover about MXP200m in maturing bonds carrying rates of TIIE +50bp and TIIE + 25bp, as well as bank credit lines. The bonds have yet to be rated. In May, GBM announced plans to raise funds for infrastructure investment through Mexico’s certificado de capital de dessarollo (CCD) market.
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IDB Raises $1.3bn Benchmark
The Inter-American Development Bank has raised $1.3bn from a new 7-year bond, its first public bond transaction of the year. The 2018 priced at 99.856 with a 1.75% coupon to yield 1.772%, or UST+29bp. The yield was equivalent to mid-swaps plus 5bp, in line with 5bp area guidance. More than 50 accounts put in for $1.5bn in orders, with significant demand from central banks and banks, which comprised nearly 85% of the book, according to bankers on the deal. Asia accounted for 62.5% of the sale, Americas 21.6% and Europe, Middle East and Africa 15.8%. Bank of America Merrill Lynch, Credit Suisse, Daiwa and JPMorgan managed the sale.
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Selloff Slams Door On Junk Names
A selloff Thursday in the broader markets has investors in flight-to-safety mode, effectively leaving the bond markets open only to high-grade issuers, bankers and investors say. This makes sense in the context of the acute decoupling between blue-chip and junk names in the secondaries yesterday. “Low beta sovereign performed pretty well,” says Klaus Spielkamp a trader at Bulltick “Colombia was up on the day and I would say Mexico and Brazil was as well, but high-betas suffered and we saw Argentina’s Bodens and Venezuela being hit and trading down two or three points.” A similar story unfolded among corporates. High-grade names like Brazilian banks Bradesco and Itau, as well as Colombian conglomerate Grupo Suramericana found support, while Brazilian beef names like Marfrig and JBS were largely being offered throughout the day. Such spread widening has really shut the door on any junk name that was contemplating a market tap, at least in the short-term. High-grade credits are more likely to lead any true reopening of the market, and could indeed benefit from a US Treasury market that saw the 10-year pierce 2% and the 30-year trade at around 3.4% Thursday. But the nervousness infecting sentiment and the extremely volatile nature of markets these days has left investors more inclined to sit on the sidelines. “The mood is still really bad. [In this market], you would prefer to lower your exposure rather than get into something that may be opportunistic,” Spielkamp adds. Worries about a double dip recession, not to mention the solvency of some European banks and the possible knock-on effects on US financial institutions leaves too many unanswered questions “We are seeing money put to work, but investors are still cautious and selective,” says one banker. Quasi sovereign Panamanian credit Empresas Nacional de Autopista got through the door Thursday following activity in the US high-grade market this week, but its rarity value and structured nature doesn’t necessarily make