Mexico’s Grupo Senda Autotransporte has launched a consent solicitation to amend terms on its 10.5% 2015 bonds. Senda wants to loosen a few of the restrictions that limit its ability to take on additional debt, and is offering holders $1.25 for each $1,000 principal amount. The offer expires August 5. JPMorgan is managing. The bus company sold the bonds in a $150m sale in 2007 through Credit Suisse.
Category: Bonds
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Transener Prints New 2021
Argentine utility Transener has priced its new 9.75% 2021 at 95.405 to yield 10.5%, helping it raise $53.1m in cash to help fund a buyback of its existing 2016s. At the same time, it has issued another $46.9m in new 2021s, which were exchanged existing debt. Investors were allowed to swap outstanding bonds for the new 2021s par for par, and receive an extra $30 for each $1,000 if tenders are submitted by the early bird date of July 25. Alternatively, they could cash in the existing bonds and receive $910 for each $1,000 in principal, plus another $90 in early bird premiums. The company is also seeking consents to amend terms and conditions on the outstanding bonds. The exchange offer expires on August 9. The 2016s were originally issued in 2006 with a $220m size and priced at par to yield 8.875%. Citigroup and Deutsche Bank led that transaction and are also acting as leads on this occasion.
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Uruguay, Peru file SEC Shelves
Both Uruguay and Peru have filed SEC selves to issue up to $5.56bn in debt between them amid expectations that both sovereigns are likely to favor local-currency trades when they do decide to tap the markets. Peru’s filing to issue of up to $5bn in new debt securities comes some eight months after the Andean country sold $2.5bn in dollar and sol-denominated bonds and after the election victory of left-leaning presidential candidate Ollanta Humala sent bonds and stocks reeling. More recently, however, Peru has seen a relief rally following Humala’s market friendly appointments at the Central Bank and the Ministry of Finance. According to the filing, proceeds are slated for general purposes including financial investments, refinancing, or the retirement of local and external debt. Meanwhile, Uruguay’s move to file an up to $560m debt shelf, as well as an upgrade to BB+ this week by S&P, have raised speculation 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. A reopening of existing UI bonds, currently trading in the 3-4% range, could come at a nice 25bp new issue premium over current trading levels, notes an EM portfolio manager who holds Uruguayan bonds. “There will be lots of interest for local Uruguayan notes,” he adds. Currently, the sovereign has three outstanding UI bonds, its 2018s, 2027s and 2037s. Just yesterday S&P upgraded Uruguay’s sovereign rating to BB+, bringing it in line with Moody’s and Fitch and putting it just below investment grade. Uruguay last came to market in May when it issued JPY40,000 ($493m) in 2021 Samurai notes to yield 1.64%, but it hasn’t been in the broader market since late 2009. Meanwhile, the sovereign has played down any talk of issuance. “The augmentation of the shelf was done b
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Venezuela’s Jumbo 20-Yr Fails to Surprise
The announcement Tuesday that Venezuela plans to issue $4.2bn in RegS only 11.95% 2031s hardly came as a surprise after rumors of such a deal had already sent secondary levels south. Indeed, many of the details circulated over the last week proved to be true, with the only slight exceptions such as talk of a 12% coupon. As is standard practice for such deals, the sovereign has set the price beforehand, in this case par, and will leave the books open to allow locals to buy at an FX rate of VEB4.30/1USD. Grey market levels of 81.50-82.50 were already being quoted yesterday as foreign accounts calculated what would be fair value on the bonds once they were free to trade in the international market after a 42 day seasoning period. At 82.50, the amortizer would offer a yield of around 14.37%, according to one investor. “All this will be sold through the Sitme (the state-run FX platform) at VEB5.30/1USD, which implies a slightly lower secondary price [than 81.50-82.50],” says RBS strategist Siobhan Morden. “Irrespective it is cheap versus the curve.” For instance, Venezuelan benchmark 2027s were trading Tuesday afternoon at 74.25, or at a lower 13.125%-13.05% yield, even after selling off in the wake of supply fears. With a $4.2bn size, the new 2031s will become a new benchmark for investors and will provide an attractive instrument to take a view on regime change as the 2012 presidential elections approached, Morden adds. If nothing else the11.95% coupon offers alluring carry. Indeed the deal is expected to go well. As one London-based investor points out, appetite for Venezuela debt remains robust in the context of new inflows to EM bond funds and the resilience of high yield EM debt. The B2/BB-/B plus bond is governed by New York law and will be registered in Luxembourg. The RegS bond will amortize equally on August 5, 2029, 2030, and 2031. Deutsche Bank was mandated as lead, but perhaps more interestingly the government has also selected Russia’s Evorfinance Mosnarban
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UVA Yet to Pull Trigger
Usina Vista Alegre (UVA) has yet to pull the trigger against what remains an uncertain market backdrop and one in which several investors were unwilling to take a bet on the single B Brazilian sugar and ethanol producer. Whether UVA will move ahead this week remained unclear late Monday, but in the current market environment few thought that it would try pricing any time soon. With the deadline to lift the US debt ceiling looming, most bankers agree that issuers are likely to wait until after Republicans and Democrats reach some sort of resolution on US Treasury payments. “It is going to come down to the wire. Late this week they will probably have something to agree on,” says a banker. “Unless something drastic happens, a positive agreement [over the US debt ceiling] may lend itself to some opportunistic issues.” Still, Mexican retail Grupo Elektra continues to move forward with its 7-year NC4, while utilities AES Gener and Transener are also carrying out their own liability management transactions. This comes as UVA left some investors voicing concerns about its 5.3x debt to Ebitdar ratio and tight liquidity after it released price talk in the 11% area. With investors seeking safety in liquidity, the $150m-$200m or smaller size certainly did not help on what is a sole lead transaction. The sugarcane grower and ethanol producer is rated B minus/B3 and is coming to market through BTG Pactual.
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Elekra Seeks $350m to Fund Capex: Fitch
Fitch has put a $350m size on Grupo Elektra’s new RegS 7-year NC4 bond after rating it BB minus yesterday. This comes as the Mexican retailer wraps up roadshow today in New York, London and Hong Kong with investors heard discussing mid-to-high 7% pricing. Grupo Famsa, another Mexican retailer, is being seen as the main comp, with its $200m of 11% 2015 NC3s being quoted at around 8% area on Friday, though it has lower B/B+ ratings and a shorter tenor. Sister company TV Azteca, rated BB minus, is seen as another possible pricing gauge with its RegS only 7.50% 2018 trading Friday at 7.12%-6.92% Friday. As positives, Fitch cites the company’s strong market share, considerable brand recognition and its geographic diversification in both the retail and finance space though Banco Azteca. Debt to Ebitda on a consolidated basis for the last 12 months ending June 30, was 9.9x versus 10.0x last year, while with the standalone retail business it was above 2x, the agency says. Fitch sees this climbing to 2.5x by the end of 2011 due to additional financing to cover capex needs, including this issue. For 2011, capex will reach around MXP2bn, it adds. Leads on the issue are BCP, Jefferies and UBS. Elektra is tapping the international markets after an over 10-year absence. It last issued a foreign bond in 2000 when it priced a $275m 8-year NC4 at par to yield 12% through Warburg Dillon Read. At the time, the company was rated B2/B.
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GrupoSura Pays up for ING Assets
Colombia’s Grupo de Inversiones Suramericana (GrupoSura) is paying a hefty price for ING’s insurance and other financial assets in Chile, Colombia, Mexico Uruguay and Peru, according to analysts that follow the company. GrupoSura agreed to acquire the assets for EUR2.68bn ($3.9bn), consisting of EUR65m in assumed debt and EUR2.615bn in cash. The deal values the assets at a 1.8x book value, or 18x estimated 2011 earnings on a GAAP basis. The deal comes at the high end of analyst expectations for the value of the operations, and at a significant premium to the 0.7x price-to-book ratio. “It’s an extremely good price,” says Jan Willem Weidama of ABN Amro, who says the consensus value for the assets was around EUR1.9bn. The deal excludes ING’s 36% stake in Brazilian insurer Sul America, which is valued for around EUR800m, around 2x book value. “Relative to our expectations it’s at the top end,” says a Europe-based equity investor. “They’re solid activities. They have leading market positions” in their respective countries. “If you get 1.8x…that seems very good,” says Dirk Peeters of KBC Securities “It’s a very good franchise. The growth expectations are simply higher in that region so that translates into a good price.” The transaction consists of mandatory pension and voluntary savings businesses, ING’s 80% stake in AFP Integra and 33.7% stake in InVita Seguros de Vida, including the company’s investment management capabilities in those countries. In May, Gruposura issued $300m in 2021 debut dollar bonds which it could use to help finance the acquisition. Gruposura says it is also hearing interest from international funds that may be interested in participating in the financing of the acquisition. Goldman Sachs managed the sale, while UBS and Bancolombia advised GrupoSura. GrupoSura’s shares closed COP36,000 on Monday, up from .the COP35,440 close on Friday.
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LatAm Corporates Reduce Refinancing Risk
Liquidity and refinancing risk for Latin America corporates continues to improve thanks to stronger balance sheets, support from governments and development banks and stronger appetite for EM assets, according to a recent Moody’s report. Of the universe of Latin American companies covered by the ratings agency, 27%present a high refinancing risk, down from the 30% seen in April 2010 and a considerable drop from the 55% registered at the height of the financial crisis in March 2009, it said. This is partly due to corporates’ efforts to refinance debt and extend maturities at a time when investor appetite for EM corporates has grown. With the European and US debt crises threatening to derail markets at a moment’s notice, Moody’s says: “Prudent liquidity management with timely refinancing will continue to be a critical consideration for ratings in the region.” LatAm non-financial corporates face come $37bn in debt maturities during 2012 and another $43bn in 2013, though those amounts will increase as short-term debt due in 2011 will be rolled over into 2012 and 2013. Of the $142bn in debt maturing between 2011-2013, about $102bn comes from investment-grade issuers. Broken down by sector, the oil and gas industry faces the highest amount of debt maturities over this period ($33bn), followed by utilities ($26bn), metals and mining ($18bn), telecommunications ($18bn) and food ($13bn), the agency says.
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M&G Hits the Road
M&G Finance, a petrochemical company with operations in LatAm, kicked off roadshows yesterday to market a $500m 7NC4 dollar bond. The 144A/RegS deal was shown to investors on Monday in New Jersey and is scheduled to move to New York, Boston, San Francisco, and Los Angeles through Thursday before wrapping up in London next Monday. The Italian-based company with a LatAm presence is a producer of polyethylene terephthalate (PET) resin for packaging applications. Bond proceeds are expected to address capex, debt repayment, liquidity and working capital. The bond is expected to get a B3/BB rating from Moody’s and Fitch. Given its presence in developing countries, the deal is being sold off both high-yield and EM desks. JPMorgan is the sole lead on the transaction.
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Petrobras Seen Tapping Opportunistically
Brazilian oil giant Petrobras is targeting $67.0bn-$91.4bn in financing needs through 2015 as part of a $224.7bn investment plan over the next four years, while also seeking to divest up to $13.6bn in assets. Capex will be covered partly through cash on hand and the rest through new debt rather than equity. And while many bankers have their doubts that the Brazilian oil giant will try its chances in the international bond markets again this year after selling a whopping $6bn in new 5, 10 and 30-year bonds in January, others don’t discount the possibility. “To say that they are 100% unequivocally done, that is not the indication I understand they gave to the market. They will be opportunistic, but they are not going to go to the market when it is shaky. They will time it right,” says one DCM banker. Such opportunities still exist despite broader uncertainties as illustrated by last week’s well-timed 30-year debut from Brazilian petrochemical concern Braskem, which is indirectly held by Petrobras and came at a 5-10bp new issue premium partly thanks to the capped $500m size, the banker adds. With Petrobras typically looking to issue in size, it would likely have to offer a more generous premium of anywhere between 15-25bp to retap its outstanding debt, say investors, analysts and bankers. That would translate into a 4.48%-4.95% yield on a reopening of the 5.375% 2021s which have been trading around the 4.70% mark, though some investors see a new 10-year coming as tight as 4.75% under current conditions. As for a reopening of the 6.75% 2041s, some accounts see a 6.25% finish as reasonable. Substantial needs mean that Petrobras has long been looking to diversify its funding sources and relieve pressure from its core dollar market. But a euro or sterling trade may not be suitable against what remains an unsteady backdrop in Europe, though investors on both sides of the Atlantic are receptive to the credit. “When markets stabilize, Petrobras has that appeal and is viewed v