Caribbean Financial Group (CFG), a holdco for consumer finance companies in Panama and the Caribbean ended fixed-income investor meetings in New York Wednesday, with no subsequent sign of coming to the market, at least in the short-term, say investors. The B minus rated corporate had been pitching a 3-year and a 5-year NC3 with a $150m-$200m size. Proceeds are thought to be slated for a refinancing of a Wells Fargo debt facility, but the US bank is heard to be flexible with the issuer’s plans and timing for a bond issue to address its revolver. Caribbean Financial Group was established in 2006 as a result of the sale of Wells Fargo Financial Latin American Consumer operations to Irving Place Capital, a private equity firm. Investors had mixed reviews on the credit with some eager to participate in a high-yield Caribbean transaction, at least if it came with minimum double digits of 10-11% and at a concession to Mexico’s Grupo Elektra’s recently issued 7-year NC4, which has been trading at around 7.25%. Meanwhile, other investors, albeit keen on the credit’s business, decided to pass given the small size and uncertainty over the credit’s future given questions over when Irving Capital would exit its investment. JPMorgan led investor meetings. According to one investor, a comfort letter was due to go stale on August 13 and so it made sense that the company waited to update its financials first before venturing into the market.
Category: Bonds
Oi Raises Jumbo Domestic Bond
Oi’s Brazil Telecom unit has completed the sale of BRL1bn ($630m) in bonds in the local market. The rule 476 sale comes with guarantees from the company’s Telemar Norte Leste unit. The 2017 bond pays the DI+1.0%, coming in under the DI+1.1% ceiling. The bond features a 1-year grace period. Santander managed the sale. Brasil Telecom and Telemar Norte Leste are two of the Brazilian telecom’s many subsidiaries that are to be rolled up this year into one opco and one holdco as part of a structural simplification plan.
UMS Samurai Plans on the Table
Mexico has plans on the table to return to the Samurai market this year after successfully retapping its century bond earlier this week for another $1bn. “The idea is still on the drawing board to go to the yen market to issue a smaller size and without a guarantee,” Alejandro Diaz, the country’s head of public credit, tells LatinFinance. The sovereign has typically tapped the Samurai market using guarantees from JBIC, but has long hoped to sell plain vanilla bonds among Japanese investors. 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. The borrower wants to build a long-term relationship with this investor base and intends to be a frequent issuer there. “Japanese investors value the fact that you don’t just go one day and forget about them,” Diaz adds. Mexico has yet to mandate banks, but it is looking at relatively small $500m size. With this week’s retap, the country has reached its stated goal of raising $3bn in the international capital markets in 2011 after earlier garnering another $2bn through two separate offerings. In April, it reopened its 6.05% 2040 bond for another $1bn with a record tight yield of 5.95%, while in February it retapped its 5.125% 2020s for the same amount to achieve a 4.844% yield. This week’s reopening of the century bond was priced at 96.50 to yield 5.959% or 241.8bp over US Treasuries. Books size reached around $1.8bn with 80 different accounts participating, Diaz says.
Mexico Shrugs off Volatility with 100-Year Retap
Mexico shrugged off market volatility Wednesday to print a $1bn re-opening of its 5.75% 100-year bond as it looked to lock in historically low yields on the back of a flight-to-safety rally in US Treasuries. UMS once again showed its willingness to move ahead of the LatAm pack tracking the nimbler US high-grade market which also saw a string of bond deals print yesterday. The deal’s success was all the more impressive for taking place during another punishing day for equity markets which this time were rattled by fears that France may soon fall victim to the euro-zone debt crisis. That backdrop was just too volatile for some investors who were unwilling to take on such heavy duration risk and held a bearish view on rates. “At some point in the future rates will have to move higher, so we didn’t want to take such long-term risk,” says one investor. Still a sufficient number of accounts liked the idea of locking in a relatively high yield on a solid sovereign credit especially in light of Fed chief Ben Bernanke’s promises to maintain a hands-off approach toward rates for the next couple of years. “The investment base for this product is binary; they either love it or hate it,” said one rival banker. “But if you want exposure to Mexico where are you going to get a 5.75% coupon, and when the curve is flattening people are willing to go farther along it.” The borrower also offered a fairly generous concession in price terms after coming at talk of 96.50 against an opening secondary level of anywhere between 98.00-98.50. Leads Credit Suisse and Goldman Sachs stuck to such levels after accumulating some $450m in reverse-enquiry demand over the last week and watching the book grow to $2bn before pricing at 96.50 to yield 5.959% or about 241.8bp over. One banker who spotted the bond at 99.00 bid or 5.80% saw the final concession at around 15bp on a yield basis. Having that backlog of anchor orders was seen as a sensible move and helped reduce execution risk in what has been
Caterpillar Argentina Plans Local Bond
Caterpillar Financial Services Argentina plans to sell up to ARP160m ($39m) in domestic bonds. The issue is to be divided into an ARP40m fixed-rate instrument and an ARP120m floater. The sale period is scheduled to launch today and close Tuesday. Citi is managing the sale, rated AA on a national scale.
Compartamos Preps Domestic Issue
Mexico’s Banco Compartamos is preparing to issue up to MXP2bn ($166m) in floating rate bonds in the domestic bond market. The micro-lender will issue 5-year bonds that will pay a spread over TIIE. Pricing is expected in mid-September. Bancomer, Banamex and HSBC are managing the sale, rated AA on a national scale. In 2001, Banco Compartamos became the first micro-lender to issue debt in the local capital markets. Compartamos last visited the local bond market in October 2010 when it sold MXP1bn in floating rate bonds that were priced at TIIE+130bp.
EPM to Seek Funding Next Year
Empresas Publicas de Medellin’s financing needs are covered over the next year, but during the second half of 2012, the Colombian quasi-sovereign utility will start to seek additional funding in both the international and local bond markets, CFO Oscar Herrera tells LatinFinance. The borrower intends to become a frequent issuer in the foreign markets after raising COP1.25trn ($679m) in January when it sold a 2021 global peso bond at 99.170 with an 8.375% coupon to yield 8.50%, Herrera adds. That transaction marked its second among international investors, with the first being a $500m 7.625% 10-year that was issued in 2009 via BAML and JPMorgan. “We will do pesos or dollars according to our needs,” he says. For the next year the company only needs to raise another $500m to cover its $800m-$1bn capex plan for 2012, but it may require more for acquisitions. “We are taking this year to consolidate the acquisitions we have made, but in 2012, we will be looking for new acquisitions in the region and that will probably need additional funding,” Herrera says. In late 2010, EPM bought Guatemalan distribution utility EEGSA for $605m in cash, plus the assumption of existing debt. Herrera doesn’t discount the possibility of tapping local markets outside of Colombia if it were to make more cross-border purchases. The company is targeting assets mostly in Central America, except for Nicaragua, but it is also eyeing Brazil, Chile and Peru. “If we were to make an acquisition in Chile or Peru, those markets are very good for raising funds at good spreads, but in Brazil it is different given the higher cost of debt,” Herrera adds.
Holcim Mexico to Issue MXP Bonds
Holcim Mexico plans to raise up to MXP3bn ($249m) in the domestic bond market in late September. The bonds, rated AAA on a national scale, are scheduled to be issued late September. The bonds will be guaranteed by Switzerland’s Holcim. Tenor has yet to be determined, but the cement company may raise the money through 2 tranches, offering fixed and floating rate instruments. Proceeds are going to refinance debt. Banamex, BBVA Bancomer and Santander have the mandate.
Senda Gets Majority Consent
Mexico’s Grupo Senda Autotransporte has clinched a majority acceptance in its consent solicitation to amend terms on its 10.5% 2015 bonds. With the approval, Senda can loosen a few of the restrictions that limit its ability to take on additional debt. It offered holders $1.25 for each $1,000 principal amount ahead of the expiration date on August 5. JPMorgan managed the transaction. The bus company initially sold the bonds in a $150m sale in 2007 through Credit Suisse.
Transener Tops 50% in Bond Exchange
Argentine utility Transener saw a 56.6% participation rate in its offer to exchange or repurchase its outstanding 2016 bonds. In an operation that expired Tuesday, holders representing $47.4m of the bonds agreed to exchange the exiting debt for new 2021 notes, and holders of another $21.8m swapped their bonds for cash. Investors were allowed to exchange outstanding bonds for the new 2021s par for par, and receive an extra $30 for each $1,000 if tenders were submitted by the early bird date of July 25. Alternatively, they could have elected to receive $910 cash for each $1,000 in principal, plus another $90 in early bird premiums. To finance the transaction, Transener last month sold $53.1m in new 9.75% 2021s at 95.405 to yield 10.5%, while also issuing another $46.9m to be used in the exchange. Citigroup and Deutsche Bank managed the process.