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.
Category: Bonds
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.
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.
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
Transener Eyes Tuesday Pricing on New 2021
Argentine utility Transener is looking to price a new 2021 as soon as today, as it looks issue new debt as part of a debt exchange and buyback of its existing 2016. Books closed yesterday, and the borrower is offering to pay a nominal annual rate of 9.75% on the up to $148.6m issue of 2021s. Investors can exchange the existing 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 can 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 final size of the issue could be higher depending on the success of the liability management operation, but it cannot exceed the $300m ceiling set by the program. 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.
Unifin to Issue MXP Issue
Mexico’s Unifin Financiera is preparing to issue up to MXP400m ($34m) in the domestic bond market. The 5-year floating rate bonds will pay a spread over TIIE. Pricing is expected at the end of August. Standard & Poor’s and HR Ratings assigned local triple A ratings for Unifin. IXE is leading the transaction.
EM Bond Inflows Keep Coming
EM bond funds took in $535m for the week ending July 20, according to EPFR Global. According to Lipper, EM debt fund inched higher by 0.72% for the week ending July 21, and are up 5.73% ytd. Meanwhile, global income funds climbed 0.32% for the week, to reach 4.43% growth ytd. International income funds rose 0.91%, bringing the ytd return to 5.57%.
La Construction Eyes July 28 Pricing Date
Chile’s Sociedad de Inversiones y Servicios de la Construccion has unveiled more details on its upcoming UF2.5m ($118.9m) 3 tranche domestic bond issue after filing a prospectus late last week. A pricing date has been set for July 28. The borrower plans to issue up to CLP54.8bn in a Series A tranche with a 6.8% coupon, a Series B tranche of up to UF2.5m paying a 3.2% coupon, and a Series C tranche of up to UF2.5m with a 3.6% coupon. Series A and B carry 5-year tenors and bullet payments. Series C has a 21-year tenor with a 10-year grace period. Celfin and IM Trust are managing the sale, rated AA/AA+ on a national scale. The issuer is an investment vehicle of a construction trade association called Camara Chilena de la Construccion. It holds stakes in the AFP Habitat pension fund, insurance companies Camara and Isapre Consalud, while also having holdings in clinic operator Red Salud and other companies.
Mexico Gets IDB Loan
Mexico’s Secretaria de Agricultura, Ganaderia, Desrollo rural, Pesca y Alimentacion (Sagarpa) will receive a $190m loan from regional development bank the IDB. The loan has a 25-year term, a 3-year grace period and a rate based on a Libor spread. According to the IDB, it will help finance productivity in the fish and fish-farming sector. The Mexican government will also kick in $74.4m for a total investment of $264.4m, benefiting around 5m agricultural producers. About $70m of the IDB loan will be dedicated to the control and eradication of agrofishing diseases.
Investors Talk Pricing On Elektra
Investors are heard seeking a 7%-8% yield on Mexican retailer Grupo Elektra’s new benchmark-size RegS 7-year NC4 bond. The buyside is taking Grupo Famsa, another Mexican retailer, as the principal comp, although its $200m of 11% 2015 NC3s carry a shorter tenor and are rated B/B+ by Fitch and S&P, a notch below Elektra. Those bonds were priced last year at 99.063 to yield 11.25%, but were trading Friday in the 8% area. Sister company TV Azteca, rated BB minus, is seen as another possible comp despite the difference in sector. The Mexican TV concern sold $300m of RegS only 2018 bonds earlier this year with a 7.50% coupon to yield 7.75% and the bonds were trading at 7.12%-6.92% Friday. Still, accounts have expressed some concerns about transparency on the Elektra deal given its RegS only format and a solitary BB rating by Fitch. The company is also part of the holdings of Ricardo Salinas who has courted his fair share of controversy in recent years after being investigated by the SEC and de-listing Grupo Azteca in the US. The borrower is continuing its global roadshow in New York, London, Singapore and Hong Kong early this week with leads 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.