Brookfield Incorporacoes has set the terms for a BRL300m ($191m) bond sale in Brazil’s domestic market. A BRL77m 2015 tranche pays the DI+1.55%, coming in under a DI+1.6% ceiling. A BRL223m 2016 piece pays the DI plus 1.75%, equaling the maximum set prior to bookbuilding. BTG Pactual and HSBC are managing the sale, done under the rule 476 restricted format. Brookfield is rated A3/A+ on a national scale.
Category: Bonds
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Helm Sells Local Bonds
Colombia’s Helm Bank has sold COP300bn ($166m) in domestic bonds, the maximum it was authorized to issue. Other financial issuers were looking to follow soon, but Banco Davivienda’s postponement Monday of a COP300bn-COP500bn ($165m-$275m) bond sale due to come to market on Wednesday has raised some doubts about other issuers in the pipeline. Other banks who are hoping to access the market in the next 3-4 weeks include Banco Falabella, Banco Finandina and Banco de Bogota. Helm opted for 4 of 6 available tranches, after getting an overall demand of COP752bn. A COP89bn 3-year note pays the interbank rate IBR+1.95%, a COP70bn 5-year IPC-indexed bond pays 4.08%, a COP49bn 7-year inflation-linked UVR-denominated bond pays 4.58%, and a COP93bn 7-year IPC-indexed bond pays 4.35%. Helm managed the sale itself, rated AA+ on a national scale.
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Colombian Bank Plans Local Sub Bonds
Colombian lender Banco GNB Sudameris plans to issue in the domestic market through a COP500bn ($278m) subordinated bond program. As is common practice in Colombia, the bank would be able to choose from a variety of maturities and benchmarks at the time of issuance. A fixed-rate portion would pay interest at up to 12.5%, an inflation linked portion would pay up to 7.5%, and two floating-rate tranches would pay the benchmark rate DTF plus up to 5.0% and the interbank rate IBR plus up to 5.5%. Maturities are for 5-10 years. Proceeds will finance the bank’s capital needs. GNB’s own Servivalores unit is managing the sale. It does not give information regarding the timing of the first issuance. The IBR rate is being quoted at around 4.46%, while DTF is at 4.44%.
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EM Bond Funds See Safe-Haven Surge
EM bond funds took in $1.3bn for the week ending August 3, according to EPFR Global, as investors viewed the asset class as a safe haven amid broader market turmoil. According to Lipper, EM debt funds rose by 0.22% for the week ending August 4, and are up 6.70% ytd. Meanwhile, global income funds climbed 0.18% for the week, to reach 5.13% growth ytd. However, international income funds fell 0.54%, bringing the ytd return to 5.65%.
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Tecnisa to Try Local Funding
Real estate developer Tecnisa plans to sell up to BRL300m ($190m) in bonds in Brazil’s domestic market, choosing from among three possible tranches during the bookbuilding process. A 2015 tranche would pay the DI plus up to 1.85%, a 2016 tranche would pay DI plus up to 2.0%, and a 2017 inflation-linked portion would pay a fixed rate. Tecnisa is raising funds to improve its debt profile and provide working capital. An IR official says the company will not unveil the lead(s) on the deal until later this week. The paper is being sold under a 476 restricted format. Tecnisa is rated A minus on a national scale.
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CFG to Meet Fixed Income Accounts
Caribbean Financial Group (CFG), a holdco for consumer finance companies in Panama and the Caribbean, is meeting with fixed-income investors starting today via JP Morgan with the intention of selling a144A/RegS offering market conditions permitting. CFG is commencing meetings in Los Angeles before heading to London next Monday, Boston on Tuesday, and wrapping up Wednesday in New York. CFG offers consumer loans to the low-income segment of its Island Finance subsidiaries in Aruba, Bonaire, Curacao, St. Maarten, and Trinidad & Tobago. CFG also owns Financiera el Sol which operates in Panama. CFG finances operations with a single commercial credit line and is looking at the debt capital markets to substitute bank financing with long-term debt bond issuance, S&P says. CFG is rated B minus by S&P and Fitch.
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M&G Heard Extending Investor Talks
M&G Finance is heard extending fixed income investor meetings into next week as it looks to issue a 144A/RegS for life in $500m 7NC4 senior unsecured notes, with rumors of a 10-handle pricing. The US subsidiary of Italian chemical company Mossi & Ghisolfi International, with extensive operations in Mexico and Brazil, initially launched its roadshow July 25-29 in the US before wrapping up in London on Monday. Investors say they like the business, but express concern over a decision taken by the PET resin producer, under its hybrid bond agreement, to suspend coupon payments during the 2009 financial crisis. The company has since seen improvements in 2010 and 2011 supported by a favorable operating environment and declining competition seen by chemical commodity manufacturers. In 2007, M&G issued EUR200m 7.5% hybrid bonds and later bought back EUR128m of the bonds at 45% discount. The remaining EUR72m of the hybrid bond is held by third parties. “The company has a decent business but had a bad run when it penalized investors,” notes one banker. Fitch expects M&G’s net leverage ratio to increase to a peak of 4.4x in 2013 from 3.1x in December 2010 due to investments in new PET and PTA plants totaling around $700m. Use of proceeds is intended for capex, debt repayment, liquidity and working capital. Some investors looking at the credit are seeking a concession due to it being a first time issuer, its lower rating, small size, lack of strategic partnerships, and rising leverage. The bonds are rated B3/BB by Moody’s and Fitch. JPMorgan is the sole lead.
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Volatility Raises Questions about Bond Supply
Some bankers have been predicting anywhere between $5bn-$7bn in new bond supply for September and perhaps some more this month as companies look to tap before the post-summer rush, but this week’s rout and the gloomy mood hanging over the market raises doubts about just how many deals will see the light of day, at least in the short-term. This comes after US equity markets fell a good 4% Thursday, while the Bovespa plummeted 5.7% as risk aversion spiked over fears of an economic slowdown. “If risks escalate and there is a massive selloff in the markets, the September pipeline could move to December,” says one investor. Names like development bank BNDES, Colombian utility Empresa de Energia de Bogota (EEB), Brazilian electricity company Eletrobras, Brazilian toll-road company CCR, steelmaker Usiminas as well as banks like Banco do Brasil and Bradesco have all been heard eyeing either the dollar or global BRL market. To be sure, in theory pricing has become even more attractive after the yield on the 10-year UST hit 2.46% Thursday, breaching the 2.49% low reached in November 2010, but volatility is likely to make execution difficult. “If USTs continue at low levels and market conditions permit, there is potential for very high volumes in the $5bn-$7bn range or more,” notes a DCM banker. “Activity in the secondary over the last few sessions has seen demand for the belly of the curve but there has been more interest for 30-year bonds.” However, Wednesday saw secondaries slump alongside the rest of the broader market. “This is probably the worse day in EM debt this year, though we have yet to get to levels seen during the May sell-off last year,” said one EM corporate investor Thursday. “People are waiting for the payroll number (Friday) to see if we get some relief from that.” Still investors have money to put to work and bankers have been expecting companies to start announcing deals in late August. Meanwhile, the buyside is putting greater emphasis on liquidity. “In t
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Paraguay Gets $75m from CAF
Regional development bank CAF has provided Paraguay with a $75m loan to support a government program to develop a more efficient and reliable national electricity system. The loan will also comprise an additional $20m in co-financing from the OPEC Fund for International Development (OFID). The estimated cost of the development program is $111m, of which 68% will be financed by CAF, 18% by the OFID and the remaining 14% financed by resources from the National Electricity Administration.
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Safra Whispers Low Double Digits
Banco Safra is heard whispering 10.5% area on its 5-year senior unsecured Global BRL bond, with pricing expected as soon as today. Investors are comping against Banque Safra Luxembourg’s BRL400m Reg S only 10% 2015 (BBB minus), which was priced at 99.627% to yield 10.125% in June and was trading Tuesday afternoon at around 9.9%. “A 10.25% handle would be fine [to participate],” notes one senior portfolio manager following the name. Another, albeit less than perfect, comp is Banco Votorantim’s inflation-linked BRL1bn 6.25% 2016s (Baa2/BBB minus), which have been trading around 10% including IPCA. Investors are comfortable taking exposure to Banco Safra risk in light of the Baa2 and BBB minus ratings from Moody’s and Fitch, but increasing concerns over rapid credit growth in Brazil may mean that accounts will demand higher yields. Investors say Safra is looking at a BRL 300-BRL400m size for the 144A/Reg S deal. JPMorgan and UBS are the leads.