Elektro has completed a BRL300m ($190m) bond sale in Brazil’s domestic market. The utility and AEI subsidiary secured a BRL150m 2016 tranche to pay the DI+0.98%, coming in under a 1.12% ceiling. A BRL150m IPCA-linked 2018 tranche pays a fixed 7.68%. Both portions feature a 1-year grace period and amortize in equal parts in the final 3 years. Proceeds are going to repay existing debt and for working capital. Banco do Brasil and HSBC managed the sale, done under the rule 476 restricted format.
Category: Bonds
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Chilean Pharmaceutical Maker Plans Bonds
Laboratorios Andromaco has filed a shelf to sell domestic bonds in Chile. The maker of dermatological and other pharmaceutical products will be able to issue off a UF2m program with tenors of up to 10 years and off a UF2m program with maturities of up to 30 years. It does not name a lead manager. Proceeds are marked for investments, working capital and debt refinancing.
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EEB Heard Mandating Banks
Colombian utility Empresa de Energia de Bogota (EEB) is heard mandating Deutsche Bank and Santander for an international bond to help fund an upcoming call on its $610m 8.75% 2014s. The NC4 senior unsecured notes were issued in 2007 to partially pay down a bridge loan used to finance the $1.5bn acquisition of natural gas distributor Ecogas. The bonds are callable in October at 104.375, at 102.88 in 2012 and at par in 2013 and after. The bond also carries a make-whole call prior to year four at 75bp and a change of control put at 101.00. EEB bonds were trading Tuesday afternoon at 2.81% on yield-to- worst basis and at a price of 104.35-105.5. ABN AMRO, now RBS, was the sole bookrunner on the last issue with BBVA, Caylon and Mizuho working as joint lead managers.
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ENA Ventures Forth In Quiet Market
Panama’s Empresa Nacional de Autopista (ENA) emerged with official guidance Tuesday on a dual-tranche $395m issue, offering investors between high 100s to mid 200s over the Panama sovereign. Books were heard to be covered by Tuesday and went subject late afternoon ahead of expected pricing today. The deal comes amid continued uncertainty in the broader markets, leaving some accounts disinclined to participate in what is a relatively small and illiquid structured trade. Indeed the borrower is treading a somewhat lonely path this week in what has been a quiet LatAm new issuance market. Still unsteady markets haven’t deterred US high-grade names from tapping in recent days and this bodes well for the BBB minus/BBB rated ENA bonds. And despite a dearth of true comps, other investors have expressed satisfaction with the credit given the decent pick-up over the Panama 5.25% 2020s, which have been trading in the 3.54%-3.42% area. That compares to official guidance of 6% area on a $170m A tranche, with an average life of 8.40 years and a final maturity of 2025, and 5.25% area on a $225m B tranche, with a 4.59-year average life and 2019 maturity. The 144/Reg S 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 call at Treasuries + 50bp. Proceeds 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 are leads.
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Guatemala Sends RFPs for Foreign Bond
Guatemala has sent out RFPs to raise up to $500m in the international bond markets through a 144A/RegS offering, with submission deadlines set for August 26. But bankers are resigning themselves to competing on a fee basis as is standard practice in many Central American countries. “[It] will be a typical point-based antiquated RFP a la El Salvador that heavily favors the lowest fee above all else,” said one banker. Competition for such mandates have stirred up its fair share controversy, most recently after Deutsche Bank won sole lead spot on an El Salvador deal late last year with a 1bp fee. Proceeds from the Guatemala trade are expected to refinance its maturing $325m 10.25% bond due November 2011. This comes after S&P recently revised its outlook on Guatemala’s BB/B foreign currency rating to negative from stable. The rating agency noted that political polarization is hindering fiscal reform at a time when the country is suffering from low tax revenues combined with an increasing interest burden.
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Banobras to Help Refinance State Debt
Mexico’s finance ministry plans to announce this week a program to refinance debt of some states. Specifics should emerge this week, but Banobras will participate by offering guarantees. “Though state debt is not a general problem, at about 2.5% of GDP, there are some governments that need to undergo refinancing operations to improve their financial positions,” it says.
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Mexico Eyes Sale of Domestic 20-Year
Mexico plans to carry out another syndicated sale of domestic bonds as soon September, this time targeting a 20-year tenor and using a hybrid system of auctions and bookbuilding, public credit head Alejandro Diaz de Leon tells LatinFinance. “It is likely to take place in September, but let us see how market conditions evolve,” he adds. Such bookbuilding operations were started in 2010 and designed to allow the sovereign to issue a large offering in one fell swoop rather than having to build outstanding size incrementally through a series of auctions. This way the bonds would immediately qualify for inclusion in key indices and draw in a broader group of investors. However, the process has been fine-tuned along the way as the sovereign tried to create more efficient pricing mechanisms. The pure bookbuilding process of earlier issues created distortions as local investors often pushed back verbally on certain pricing levels only later to put in strong orders. So in its last issue of MXP25bn 2016s in July, public credit first established a maximum yield, in this case 6.10%, and then conducted an auction process through the 8 market makers while at the same time generating momentum beforehand through traditional bookbuilding, says Diaz de Leon. Investors can put in bids through one or all of the 8 market markers. “Instead of taking the risk we don’t have sufficient demand, it is better to have a market driven bookbuilding,” he says. “We still benefit from the market makers’ sales forces contacting investors and creating enough momentum to allocate (in size).”
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Nutresa Seeks Further Acquisitions
Colombian food company Nutresa is now fully capitalized for this year after its recent COP522.5bn ($299m) equity follow-on, but could come to the markets again once it finds other acquisition targets, the company’s CFO Ana Maria Giraldo tells LatinFinance. Giraldo points out that with a net-debt-to-Ebitda ratio of just 1x, Nutresa’s leverage is still low. “We have low debt levels and this allows us to look at acquisitions,” she says. The company is looking to spend anywhere between $500m-$600m on its next target and the recent share issue has helped prepare the ground for any potential purchases. Target countries and regions are Peru, Central America, the Caribbean and the US, and Nutresa is now focusing its efforts on the cold cut sector after having bought US biscuit maker Lil’ Dutch Maid in 2010 and ice-cream company Helados Bon in the Dominican Republic this year. Depending on the size of the acquisition, the company may try its luck with a level 3 ADR, Giraldo says. Though Giraldo doesn’t discount international bond issues, she says there are more cost effective sources in the local markets and through bi-lateral loans with domestic banks which are still liquid. “Banks are offering very competitive financing,” she adds. Raising capital in other LatAm bond markets is also a possibility. Indeed, Nutresa was one of the first companies to tap this type of funding source when in 2009 it placed $40m equivalent of 10-year notes among Peruvian institutional investors, paying Libor+1.80%. It also raised local financing in Costa Rica after buying Galletas Pozuelo in 2006, and took out an $85m bi-lateral loan with US boutique Stephens when it acquired Lil’ Dutch Maid.
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Pemex Plots Local Jumbo Bond
Pemex is preparing a transaction of up to MXP15bn ($1.22bn) for the domestic bond market. The state-owned oil producer plans a TIIE-based 7-year tranche, a 10-year fixed-rate portion and a 15-year piece denominated in inflation-linked UDIs. Proceeds are marked for investments and repaying existing debt. Banamex, BBVA Bancomer and HSBC are managing the deal, rated AAA on a national scale. Though timing depends on regulatory progress and market conditions, bankers say the deal could come as soon as the first week of September. Pemex placed MXP10bn in 5-year bonds locally earlier this year.
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Brazil to Create Blue-Chip Credit Reference
Brazil’s central bank plans to start publishing in September a new benchmark interest rate to be granted to low-risk clients, according to remarks made to the press by the central bank head Alexandre Tombini. The move is aimed at increasing transparency and conditions for competiveness in the banking sector. The new indicator will be published first as part of the central bank’s financial stability report in mid-September and would be similar to that of the prime rate used in other countries. The central bank currently publishes average interest rates charged by banks but does not distinguish them by credit risk.